Cutting the Tax Bill: Proven Ways to Reduce Taxes on Investment Returns by Richard Blair
Published on: 09-30-2025
Richard Blair noted that investment success isn't just about growing your wealth it’s about protecting it One of the most overlooked threats to portfolio growth is the impact of taxes, particularly capital gains taxes. Without a smart tax strategy, a substantial portion of your investment profits could end up in government hands. That’s why learning how to minimize taxes on investment gains is crucial to achieving long-term financial efficiency. The first step toward tax-smart investing is understanding how capital gains work. If you sell an asset like a stock or a mutual fund for more than you paid, the profit is taxed But timing matters Gains from investments held for over a year qualify as long-term capital gains, which are taxed at a lower rate than short-term gains Holding your assets for an extended period may reduce your tax rate and enable you to retain a greater portion of the profit
Another effective method is tax-loss harvesting, which involves selling underperforming assets to offset the gains from successful ones This strategy helps reduce your taxable income and rebalance your portfolio simultaneously
Where you hold your investments is just as important as what you invest in High-turnover investments or income-generating assets may be better placed in tax-deferred accounts like IRAs or 401(k)s, where you won’t pay taxes until withdrawal Conversely, tax-efficient investments, such as index funds or municipal bonds, are often better suited for taxable brokerage accounts.
Don’t overlook tools like Roth IRAs, which allow your investments to grow and be withdrawn tax-free in retirement. And if you’re feeling philanthropic, donating appreciated assets to
charity can help you avoid capital gains taxes altogether while supporting causes you care about
Being proactive about taxes can enhance your investment performance and preserve more of your wealth The key is integrating tax planning into your overall financial strategy not just at year-end, but throughout the entire year
Note: This is for informational purposes only and is not intended as legal, tax, or investment advice, or a recommendation of any particular security or strategy. It does not address specific investment objectives, the financial situation, or the individual needs of any person. Wealth Solutions, Inc., a Registered Investment Advisor with the State of Texas, offers advisory services. Registration as an investment advisor does not imply a certain level of skill or training.