I found this article about tips an adviser shares with his ultra wealthy clients. Each week I'll post about a tip and how it applies to regular people.
Tip #1 - Be mindful of the tax consequences on any investments you make.
Even working people pay taxes, and famously Warren Buffett's secretary pays a higher rate than the billionaire because of the types of income he generates - from investments, not working.
But for regular people, taxes are still important. Even if your tax rate is 15%, that's still 15 cents of every dollar you lose to the government. Wouldn't you prefer to keep that money, or at least minimize it?
One area where taxes will have a huge impact is saving in a 401k. It's a ticking tax time bomb. As that account gets bigger, your tax liability gets larger. The IRS is happy to wait for your money knowing that while it's growing for you, it's growing for them.
There are other ways to save for retirement and diversify tax-wise. Are you taking advantage of them?
