Investment Planning
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- Risk Assessment
Every investor has a different level of risk that they are willing to accept in their portfolio. Over time, this acceptable level of risk changes. It is important, therefore to conduct an assessment of your risk tolerance and the risk in your portfolio periodically. - Tax Consequences
When investing, the rate of return (ROR), also known as return on investment (ROI), can be greatly affected by taxes. Taxes must be considered when choosing between alternative investment opportunities. - Asset Allocation
Asset allocation is the strategy used in choosing between the various kinds of possible investments, in other words, the strategy used in choosing in what asset classes such as stocks and bonds you want to invest.
Financial Services Investment Planning Tax Consequences
Investment Planning, Tax Consequences
When investing, the rate of return (ROR), also known as return on investment (ROI), can be greatly affected by taxes. Taxes must be considered when choosing between alternative investment opportunities.
A return may be adjusted for taxes to give the after-tax rate of return. This is done when taxes consumed or consume a significant portion of profits or income. The after-tax rate of return is calculated by multiplying the rate of return by the tax rate, then subtracting that percentage from the rate of return.
For example: A return of 5% taxed at 15% gives an after-tax return of 4.25%
0.05 x 0.15 = 0.0075
0.05 - 0.0075 = 0.0425 = 4.25%
A return of 10% taxed at 25% gives an after-tax return of 7.5%
0.10 x 0.25 = 0.025
0.10 - 0.025 = 0.075 = 7.5%
Investors usually seek a higher rate of return on taxable investment returns than on non-taxable investment returns.
Dugan & Lopatka Financial Services is affiliated with Dugan & Lopatka, CPAs and as a result, we have access to some of the area's top tax professionals.
We can help develop an investment strategy that incorporates tax considerations into your portfolio.
Dugan & Lopatka Financial Services, LLC104 E. Roosevelt Rd., Wheaton, Illinois 60187Phone: (630) 665-0914Fax: (630) 665-5030
DUGAN & LOPATKA FINANCIAL SERVICES IS NOT AN AFFILIATE COMPANY OF LPL FINANCIAL. SECURITIES AND ADVISORY SERVICES OFFERED THROUGH LPL FINANCIAL, A REGISTERED INVESTMENT ADVISOR, MEMBER FINRA/SIPC.
