Income taxes on dividends, short-term capital gains, and long-term capital gains can significantly reduce the aftertax return
that a taxable investor earns, relative to the pre-tax return on a mutual fund.
"Finally, it is a good rule of thumb when making any investment to ensure you understand what it is you are committing your hard earned money to."" When you make your priority in choosing one investment over another its success in minimising tax rather than maximising aftertax return
, you are failing to see the wood for the trees
The increased loan provisions in absolute amount, nonetheless, depressed aftertax Return
on Assets to 1.1 percent from 1.2 percent in the first quarter of 2008 and 1,5 percent in Q1-2007.
Berkshire pays no dividend because CEO Warren Buffett believes that he can earn a higher aftertax return
by retaining capital than his shareholders could if he paid it out.
* A Roth IRA provides investors with a substantially greater aftertax return
than a taxable investment or a nondeductible IRA.
We use these measures of nominal return to form [r.sub.jt], the one plus real, aftertax return
on the jth asset; details are provided in the Appendix.
And the gap between pretax and aftertax return
has declined substantially.
The results suggest that investors who are not holding index funds, but who invest through actively managed equity, funds, may improve their aftertax return
by holding equity mutual funds in their tax-deferred account rather than in a taxable account.
Why invest at an 8% aftertax return
and pay 12% on a car loan?
With combined assets of 596 billion rupees, the aftertax return
of these units was just 1.14 per cent in 1987-88.
Since an individual manager can add dramatically to a portfolio's aftertax return
, the client with little in taxable accounts may be slower to realize the advantages of a private manager's services.
It should be noted that when aftertax returns
are required, the tax lot selection will affect the fund's aftertax return