Tax Efficient Investing with Exchange Traded Funds (ETF)s
- Filed under: Wealth Investing
- Date: Feb 9,2008
The tax benefits of Exchange Traded Funds (ETF)s are clear once you know. They are an improvement on traditional index funds because they delay capital gains taxes because when the ETF stocks are traded they are not bought and sold over and over. They are instead held in waiting until someone else buys them. So you are not really taxed until the day you actually sell your stocks.
Tax Efficient ETF Investing Benefits
Delayed capital gains taxes - they allow an investor to pay most of his capital gains upon final sale of the ETF, delaying it until the very end.
In this respect your wealth accumulates a lot quicker then constantly being knocked by capital gains taxes from the start to the end.
Simple Balanced ETF Portfolio for high gains that actually can beat the market can make up your entire investment portfolio. ETFs outperform traditional mutual funds by as much as 33% more in realized wealth gains towards your retirement.
Personally I try to invest about 90% in ETFs and I even invest in ETF Bond Funds such as iShares Lehman Aggregate Bond (AGG). They are well diversified, management costs are dirt cheap and they are capital gains optimized. What more can you ask for in headache free investments?
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