⚡ LIGHTNING ROUND

💡 The Hidden Return: A 9% tax-optimized deal can beat a 12% taxable one.

📊 The Math: On $1.8M over 30 years, that’s the difference between $1.8M and $2.4M — or $63k vs. $84k/year in retirement income.

⚖️ Why It Happens: Tax code favors long-term gains, deferral, muni interest, ETFs, and loss harvesting. The wealthy stack them all.

⏳ Why Now: With Congress running record deficits, taxes will eventually have to rise.

🧠 Action Today: Match assets to accounts, check for year-end tax drag, compare muni vs. corporate yields, and use losses strategically.

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WEEKLY WISDOM

FINANCIAL PLANNING HACKS

The 9% That Beats Your 12%

Most investors chase the biggest number they see.

12% return? Sounds better than 9%.

That’s where people trip up.

The wealthy play a different one: they don’t ask “What did I make?”

They ask “What do I keep after tax?”

The Counterintuitive Math

This is where is gets interesting:

• Investor A chases a 12% return, taxed at 35%. Net: 7.8%.

• Investor B takes a 9% return in a tax-optimized wrapper. Net: 9%.

Same markets. Same risk. Just different positioning.

Over 30 years on $1.8M (the average net worth at retirement age in the U.S.):

That “tiny” tax edge translates into $600,000 more wealth. Or in practical terms: an extra $21,000/year of retirement income without taking on more risk.

Think of taxes like a leak in the bucket. It doesn’t matter how fast you fill it if you don’t plug the hole.

Why the Wealthy Always Win This Game

The IRS code quietly tilts the board for those who know how to use it:

• Rate Gaps — Long-term gains and qualified dividends at 15–20% vs. ordinary income at up to 37%.

• Deferral — Compounding on the government’s money by delaying tax.

• Exemptions — Municipal bond interest often avoids federal tax entirely.

• Vehicle Efficiency — ETFs dodge most capital-gains distributions; mutual funds don’t.

• Harvesting — Systematic tax-loss harvesting offsets gains and income.

• Cost-basis Step-up — Tax elimination if you hold until death.

Each of these adds a few basis points here, a percent there. Together, they compound into hundreds of thousands in real dollars.

Here’s What You Can Do

You don’t need a family office to use the same levers the wealthy pull. Start simple:

• Match asset to account: Keep bonds, REITs, and active funds in IRAs/401(k)s. Let ETFs and growth stocks live in taxable.

• Watch for December tax bombs: Big capital-gains payouts from mutual funds = avoidable tax drag.

• Run the muni math: In a high bracket? A 4% tax-free municipal bond may already beat a 6% taxable corporate.

• Use losses, don’t waste them: Tax-loss harvesting isn’t just for hedge funds. Even $3,000/year against ordinary income adds up over decades.

Small edges, applied consistently, turn into big money.

As Warren Buffett put it: ‘"More investment sins are probably committed by otherwise quite intelligent people because of tax considerations than from any other cause.".’

Why It Matters Now

For high earners and affluent investors, the rules are about to shift.

Congress is eyeing your portfolio as its piggybank.

They cannot pay for their spending and they will not tax their ultra-wealthy donors, so they will tax middle and upper-middle incomes.

If your 2024 tax bill felt bigger than your gains, this is why.

The wealthy are already adjusting their playbooks. Are you?

The Bottom Line

The rich aren’t playing harder. They’re playing smarter.

And the sooner you stop measuring success in pre-tax numbers, the faster you’ll start compounding like they do.

Because at the end of the day, the only number that matters is this:

What do you actually keep?

That’s the play.

Now that you know it, rest is execution.

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The content provided in this newsletter is for informational purposes only and should not be considered as specific advice for any specific individual. The information is prepared by knowledgeable individuals and is not written by certified tax professionals or investment advisors. For personalized advice tailored to your unique financial situation, consult with a qualified tax professional, financial advisor, or attorney.