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Featured Advisor



Asset Preservation Advisors




City:Atlanta

State: GA



BIOGRAPHY:
APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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Tax Planning: Increases Would Curtail Personal Spending

How will anticipated increases affect investors’ financial and tax planning?

| BY Adriana Reyneri

Tax increases would curtail spending and increase saving for a large majority of investors, according to the results of the latest Millionaire Corner survey, which indicate common tax planning strategies could curb consumer spending, a main driver of the U.S. economy.

A vast majority of investors anticipate tax increases. More than 85 percent of the investors – including 92 percent of the Millionaires - indicate that they expect their taxes to go up, according to our November survey of more than 1,195 investors from a range of wealth levels. What tax planning strategies are investors devising to cope with the anticipated tax hikes?

Investors most commonly cite “spend less” as a strategy. More than 57 percent of investors overall indicated they would cut spending if faced with tax increases, though the share exceeds 70 percent among less affluent investors, those with under $500,000 to invest.  What’s the second most likely tax planning strategy in the event of increases?

 

More than one-fourth (27 percent) of the investors say they will look for tax-advantaged investment opportunities to cope with tax increases. Millionaires are more likely to incorporate tax-advantaged investments into their tax planning. More than one-third (37 percent) of Millionaires would seek tax-advantaged investments, compared to 7 percent of individuals with less than $100,000 to invest. Previous Millionaire Corner studies show that high net worth investors consider tax consequences to be one of their top-three investment criteria, along with risk and portfolio diversification.

Investors with less than $100,000 are more likely to increase their savings (35 percent), dip into savings (22 percent) and use more credit if faced with higher taxes. In comparison, Millionaires are more likely to reallocate assets (16 percent) than save more (14 percent), dip into savings (13 percent) or use more credit (3 percent) as a tax planning strategy.

Roughly 11 percent of investors would incorporate charitable donations into their tax planning strategies.