Tax Alpha 

What is "Tax Alpha?"

Tax Alpha is a group of strategies that are designed to maximize the after-tax return of individual and institutional portfolios.

 

As they say, "it's not what you make, it's what you keep."

Here are some examples of how the advisors at Roelofs Capital Group can help you with your tax alpha:

 

  1. Tax Deferral/Tax Exempt

  2. Asset Location

  3. Trading Behavior

  4. Tax Loss Harvesting

  5. Holding Period Management

  6. After-Tax Mean-Variance Optimization

  7. Tax Efficient Hedging

  8. Single Stock Concentrated Position

Taxes can have a significant impact on an investment portfolio, especially when the returns are taxed at the higher end of the tax brackets.  For those wealthy individuals and high-income earners, who face an ever growing list of deductions they have been phased out of due to their income, these strategies can have an even higher effect on wealth creation.

 

Let's take a look at a few simple examples:  For each of these we are assuming the same 10% return per year

Tax Deferral:

$100,000 invested

30% Tax rate each year

10 years

$196,715

$100,000 invested

Tax exempt in a Qualified Account

10 years

$259,374

Tax Deferral Tax Alpha: +$62,659

Asset Location:

$100,000 invested

$50k taxable account/$50k tax deferred account

 

$50k of taxable bonds (5% annual return) in the tax account

$50k of stocks in the tax-deferred account

30% tax on income/ 15% tax on capital gains

Liquidate all money after 10 years

$161,311

 

 

$50k of stocks in the tax account

$50k of taxable bonds (5% annual return) in the tax-deferred account

30% tax on income/ 15% tax on capital gains

Liquidate all money after 10 years

$174,745

Asset Location Tax Alpha: +$13,434

The above are just a few ways we can help you increase your Tax Alpha.  For your own personal assessment-

 

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Trading Behavior:

$100,000 invested

30% tax on income/ 15% tax on capital gains

Tax exempt

$259,374

Sell assets after 10 years

$227,499

Sell assets after each year

$226,098

Trading assets multiple times per year

$196,715

Trading Behavior Tax Alpha:

+$31,875

+$33,276

+$62,659

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P: 480-686-9734

Roelofs Capital Group | 8765 E. Bell Rd., Suite 112 | Scottsdale, AZ 85260 | T: (480) 686-9734 | F: (480) 686-9737 |

E: roelofscapitalgroup@raymondjames.com

Roelofs Capital Group is not a registered broker/dealer, and is independent of Raymond James Financial Services.

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