We’ve observed among many business owners and incorporated individuals that they measure the success of their investment portfolios strictly by its rate of return, without considering the bigger picture.
When it comes to your investment strategy, tax plays a major role in the net rate of return of your overall investment portfolio. If your portfolio isn’t structured effectively, you can end up paying significantly more tax. This is why the rate of return on your investments isn’t the only factor to consider when measuring the success of your investment strategy.
Your investment statements don’t show you how your investment portfolio is taxed. They typically only show you the rate of return on your investments from the previous year. This is why we highly recommend that when you do a full review and analysis of your investment portfolio’s performance, you also factor in how your gains will be taxed.
Keeping money in portfolios that are going to be taxed as a capital gain, as opposed to interest and dividends, can be very valuable from a tax-savings standpoint. If you have a corporation, leaving money in your corporation and investing from within your corporation instead of taking that money out is extremely valuable.
If you want to learn more about how to properly structure your investment portfolio and how to ensure you’re paying the least amount of tax on the gains from your investments, book a call, we’d be love to run you through our full financial planning process.
