Tax-efficient investing — where compounded value lives.

Asset location (the simplest, largest lever)

Asset location is the decision of which asset types go in which account types based on their tax characteristics. The general rule: hold tax-inefficient investments (REITs, high-yield bonds, actively managed funds with high turnover) in tax-deferred accounts (IRA, 401(k)). Hold tax-efficient investments (broad-market index ETFs, individual stocks held long-term) in taxable accounts.

Same portfolio, same allocation, different containers — and the after-tax outcome differs by 0.3-0.7% annually for typical HNW investors. Over decades, that's a meaningful gap.

Tax-loss harvesting

Strategically realizing losses to offset capital gains elsewhere, while maintaining market exposure through carefully chosen replacement securities (to avoid the IRS wash-sale rule). Especially valuable in years with significant gains realized elsewhere — concentrated stock sales, business exits, capital distributions from private investments.

Automated tax-loss harvesting can add 0.1-0.5% of after-tax annual return for HNW investors in high-tax-rate brackets. For lower-bracket investors, the value is smaller — and in some cases, harvesting can actually be harmful (resetting a low-basis lot reduces the basis step-up at death).

Charitable strategy coordination

Donating appreciated securities to charity instead of cash is one of the highest-value tax moves available to HNW investors who give charitably anyway. The donor gets a deduction for the full fair market value AND avoids the capital gains tax that would have been due on a sale.

Related strategies: bunching deductions in alternating years (combined with a donor-advised fund), qualified charitable distributions (QCDs) from IRAs in retirement, charitable remainder trusts for larger gifts. Each fits different situations.

Withdrawal sequencing in retirement

The order in which you draw from different account types in retirement materially affects lifetime tax burden. The conventional wisdom (taxable first, then tax-deferred, then Roth) is often wrong for HNW retirees. Coordinated sequencing with Roth conversions in low-bracket years can produce meaningfully better lifetime outcomes — but requires multi-year planning, ideally before retirement actually starts.

For more on this, see Premier's Tax Strategy service page.