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Imagine you are buying a purse for your wife for Christmas. The purse is on sale for $250 down from $800. What a bargain! But all of a sudden, the salesperson tells you to pay tax on the original price.

You might think to yourself, “WTF?! I thought I was getting a deal!” And you wouldn’t be alone. Whether or not they know this, mutual fund investors should be asking the same question.

Many mutual funds contain hidden fees, which can result in millions lost during decades of investing. Capital gains tax distributions are just one of these hideous surprises for investors.

I’m not okay with that – and you shouldn’t be either.

So, here is the skinny on capital gains tax.

What is a Capital Gains Tax?

A capital gain occurs when a mutual fund manager sells a security that has appreciated. The mutual fund manager then distributes the capital gains to investors…which should be a good thing for you, right?


Since you can’t control when that security is sold, you could be vulnerable to a very large IRS bill, even though those gains were earned years before you invested in the fund. These surprise capital gain distributions significantly cut your lifetime return.

The worst part: your investing decisions have nothing to do with a high capital gains tax.

The mutual fund system itself is to blame.

Why, Mutual Funds? Why?

Will mutual funds give you the security you need to enjoy your retirement? Will mutual funds give you enough money to buy your dream house? Will mutual funds tuck you in at night?

I’ll let you in on a little secret: The answer is no!

If you continue to invest in mutual funds, you’ll continue to be in the clutches of those high tax bills. Sure, maybe you’ll evade hidden fees this year or the next, but you can never be sure when a large capital gain tax will be distributed during a year when your fund loses big time.

What Can You Do Differently?

I’ve said it a hundred times before, and I will say it a million times again.

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At ValueAligned® Partners, we invest your money in separately managed accounts where you will own shares of ValueAligned®companies.

You see, besides gaining control over the timing of capital gains tax allowing you to harvest losses and defer gains on your terms, separately managed accounts allow you to own shares of great companies directly – without the middlemen at the mutual fund companies and at the investment banks, and without all the layers of fees and expenses.

I’m happy to help you decipher the damage of mutual funds, and I’m never more than an email or a phone call away at or 732-800-2375. Schedule a complimentary financial check-up with me. It’s 100% free, and takes just 15 minutes!