Every tax season, Americans file their returns and many are faced with the tough realization of how much money from their investments are lost due to taxes. Based on various investment decisions, it may be worth asking your clients if Uncle Sam is breaking their piggy bank.
When clients allocate their investment funds, it’s important they understand the tax implications. Clients who have money in taxable investments may be losing money every year to taxes, decreasing after-tax return. In some cases, taxes may even outpace investment performance to leave investors with an annual net loss.
Your clients are likely to be familiar with certificates of deposit (CDs) and may have even been or currently are invested in them. The annual income taxes on an investment such as a CD can take a big bite out of your clients’ hard-earned savings. For those who currently hold CDs, it may be time to consider purchasing an annuity, which can offer several ways to access annuity funds without paying tax penalties.
Interest earnings on tax-deferred fixed annuities are not taxed until a client makes withdrawals or starts taking regular distributions. As a result, more of your client’s money continues working for him or her instead of Uncle Sam.