Too often, physicians focus on reducing expenses as the only means of improving investment performance. Yes, low expenses are important, but they account for less than 1/3 of the added performance you could have. Did you know there are 6 other ways to improve your investment performance? Morningstar, Vanguard, and Envestnet studied and published research on these 7 techniques which may help your portfolio too.
- Dynamic withdrawal strategies - adjusting which assets you use for income and the amount.
- Asset allocation - having the right mixture of stocks, bonds, real estate, cash, and alternative investments based on when you will use the investment.
- Lower cost investment - self-explanatory.
- Sytematic rebalancing - selling some of the winners (sell high) and buying assets that recently fell (buy low). Studies show the best time to rebalance is based on trigger points around volatility rather than calendar timing.
- Tax-efficient withdrawals - it’s not how much you make, but how much you keep after taxes.
- Asset location - investment growth is taxed as capital gains, ordinary income, or tax free in Roth accounts. Holding the right investment in the right account maximizes after tax growth.
- Tax loss harvesting - when markets fall, realize capital losses to save on taxes.
If you haven’t accounted for all 7 items in your portfolio, schedule a meeting to see how your portfolio could benefit.
P.S. Download the 2022 tax brackets, retirement contribution limits, investment checklist, and quick decision flow charts from the new WisMed Mobile app.