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Featured Advisor

Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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Investor Tax-Saving Strategies

Which is the most popular? How are investors reducing their tax burden?

Reducing your tax burden is one of the keys to wealth-building, and according to a recent Spectrem Group survey of investors with more than $500,000 of investible assets, the most effective strategy investors employ is hiring a tax advisor. More than 60 percent across wealth, gender and occupational levels said this was their preferred method to save on their taxes.  It is not surprising that seeking out a professional financial advisor is rated so highly. According to other Spectrem Group research, a third of investors with a net worth between $100,000 and $5 million cite decisions made for them by their advisor as one of the factors in obtaining their wealth (this percentage was higher-41 percent-in Ultra High Net Worth households with a net worth between $5 million and $25 million).

The next most preferred method for reducing one’s tax burden is a regular IRA. Of the nearly 53 percent of investors who cite this strategy, it is most popular with Millionaire households (nearly 56 percent) and Senior Corporate Executives (57 percent), and least popular with Business Owners (nearly 47 percent). At nearly 48 percent, real estate is their preferred method for saving on taxes.

A Roth IRA is the next overall most popular tax-reducing strategy. Forty-eight percent of investors prefer this strategy. Unlike an IRA, there is no tax break on contributions. However, the money that comes out in retirement will be tax free. A Roth IRA is most popular with male investors (49 percent) and Senior Corporate Executives (nearly 50 percent).

At 45 percent, old school real estate is the next overall tax-saving strategy. In addition to deductible mortgage interest, there are tax benefits to rental and commercial property ranging from tax-free income for second homes that are rented for 14 days or less each year to depreciation of buildings and property. Bonds (nearly 38 percent) and annuities (30 percent) are the next most popular ways to save on taxes.

By far the least popular strategy among investors surveyed was reverse mortgages (nearly 10 percent). This controversial product, available to seniors 62 and older who own their house free of substantial debt, charges high fees and has limited tax benefits. You can read more about it here (../Content_Free/reverse-mortgages-offer-limited-tax-benefits)