What you should know about tax efficient while planning your retirement savings or investment?

What you should know about tax efficient while planning your retirement savings or investment?

By Emmanuel Kilwana

One of the most important steps you and your financial advisor can take is to minimize the impact of taxes can have on future savings and retirement. Taxes can impact your investment if not carefully planned, for example choosing to pay for your taxes now for your future investment can have a bigger advantage now than later, reason being that many governments are borrowing now to cater for their public expenditures. In order to pay off their debts, they have to raise their taxable base which means more taxes in future than now. According to Crets Financial Services, clients should consult with their financial advisor for valuable assistance in determining the best approach to minimizing their taxes.

While tax-advantage accounts are good for meeting longtime goals, such as retirement, most investors also have money in taxable accounts .But even taxable accounts can be managed with an eye on tax efficiency. WHAT MAKES TAXES MORE EFFICIENT? Factors as investment approach or methodology can weigh heavily fund tax efficient .However certain investment are more tax efficient by their nature than others .With stock funds. For example, the amount a fund distributes affects its tax efficiency, but the type of distribution also plays a big role. Accountants who do tax returns for middle-income people want to help their clients pay as little tax now as possible. Yet often that’s not the best choice. Good planning is about understanding the tax burden you’re leaving behind and trying to find a good equilibrium between taxes now and taxes later

The author is licensed financial advisor for prudential assurance Uganda and CEO Crets Group Limited, he holds a bachelor’s degree in economics from Makerere University with over five years’ experience in financial services .