by Ryan McKeown, CPA, CFP®, Vice President Financial Advisor, Wealth Enhancement Group

As financial advisors we are commonly asked, "What do increased tax rates mean to my financial plan?" Our answer is simple, "You will need to take more time in preparation for how you plan your investment strategies." We recommend that you structure your investments properly using not only a diverse portfolio of investments, but also a diverse array of tax favored accounts to better manage your tax liability as it relates to your investments. There are many types of accounts that provide for the trading of investments without having the worry of taxes. These portfolios can be more actively managed without having to take taxes into the picture when doing so. In taxable accounts that don't share the same tax advantages, you may not want to have such an actively managed portfolio to avoid triggering excessive and unnecessary taxes. A combination helps make sure that no matter what tax rates are, you have a source of funds without a large tax bill.
 
If you carefully plan, even though tax rates are going to go up, you can be in a better position to manage higher tax rates. We suggest meeting with your financial or tax advisor to help determine the right combination to keep your tax bill under control.