March 2, 2018

How Taxes Affect Your Investments

The effect of taxes on your portfolio can be significant over time. Savings accounts, CDs and money market accounts are all directly impacted by taxes every year. You’re responsible for paying taxes on the earnings in these types of accounts each year, regardless of whether you’re actually withdrawing the earnings.

In tax-deferred investment vehicles like 401(k)s, annuities, and IRAs, earnings grow tax deferred. That means tax payments are delayed until the money is actually used. Tax-deferred earnings grow on top of the earnings on the existing principal investment.

It gets complicated. Have you thought about how taxes will affect your savings?

A financial advisor from Lake Michigan Investment Services can help provide the guidance needed to understand how it all comes together. The decisions you make today will affect how much of a bite taxes will take out of your funds in the future.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.