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Clear Thoughts
Are All Taxes Inevitable?
| Clear portfolios are directly owned by the investor which allows the individual to avoid embedded capital gains taxes, unlike those who own mutual funds. |
They say the only things unavoidable are death and taxes. But why pay taxes when it is not necessary?
If you are lucky enough to find a mutual fund that is up for the year, and you plan on purchasing shares of it before the end of the year, before you do, look into what is known as embedded capital gains. When you purchase a mutual fund you are essentially buying shares of a company. That company has assets that may include stocks, bonds, derivatives and other investing instruments. If you own shares of a profitable mutual fund, get this, even if the value of your shares go down between the day you purchase them and year end, if the mutual fund records a profit then you owe taxes. That is right, even if your investment loses money, if the company is profitable you must pay taxes on your share of the profits.
This unexpected tax burden does not occur when investing with Clear Asset Management. Why? The answer is direct ownership of stock and other securities versus indirect ownership. In the case of the mutual fund, you indirectly own shares and other financial instruments as a stockholder of the fund. Clear Asset Management simply does not pool assets and provides direct ownership of stock for each investor through his or her own separate account, exclusively comprised of stocks and cash. Since you have direct ownership, our performance to date has no effect on your tax liabilities. You pay taxes only on your own gains when they are realized.
So do not be lulled by big company marketing. If you were concerned about mutual funds because of hidden expenses, directed trading or any other reason, you can add embedded capital gains to your list.
Remember, we named our company Clear for a reason, to work hard for you to keep everything transparent and fair. |
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