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Clearly there's a lot to be gained from making great investments. But what most people don't realize is that keeping your profits can be even more important when it comes to building wealth.
That's why, on this final day of 2015, I want to talk about the smartest four moves you can make right now… to set yourself up for a really terrific 2016.
They're not the usual money advice though. You can simply pick up your favorite mainstream mag for that.
No… these four moves will not only change how you think about money but, in doing so, dramatically improve your profit potential, too.
But we'll have to move quickly…
Year-End Tax Move No. 1: Time Your Investments, Not the Markets
Most investors hate the idea of losses, myself included. They're a constant reminder that something didn't go as planned during the investment process.
Yet, they're also a good thing – or at least they can be in small amounts.
That's because the Internal Revenue Service (IRS) lets you use capital losses as a means of offsetting realized capital gains. So if you've got a number of big winners that have done well, selling a stinker or two in the next few days may be just what you need to cash in without triggering a monster tax bill this year.
Ideally, you want to match long-term gains against long-term losses and short-term gains against short-term losses. That way you can deduct net losses against gains.
If you run out of gains, Uncle Sam allows you to use as much as $3,000 a year to offset other types of income, such as your salary or even individual retirement account (IRA) distributions. Further, you can carry losses forward to future years until you've exhausted the "supply."
Year-End Tax Move No. 2: Hold the Right Investments in the Right Accounts
You'd think our government would make it easy to sock your money away for decades, given how much jawboning our leaders do about saving for retirement. Unfortunately, the reality is that they make it very tough – and very confusing.
That's because every type of investment account is subject to different tax treatment.
I'm bringing this up today for the simple reason that studies show that having your investments in the right accounts can increase your after-tax wealth by 15% to 20% over your investing lifetime. On $1 million saved, that's an additional $200,000 simply because you put your assets in the right place.
So here's a quick look – from top to bottom – at which types of accounts to top up first.
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About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.