Looking for a way to avoid mutual fund capital gains taxes while still growing your account? ETFs could possibly be the solution that you’re looking for. Tom and Brendan discuss mutual funds, capital gains taxes, and ETFs in this week’s video. This video comes at a good time because most mutual funds will be announcing their capital gains distributions soon. A recent Morningstar article predicts that, “in many cases–because of manager changes, persistent outflows, or a depleted store of losses that can be used to offset realized gains–funds will make (or, in some cases, have already made) sizable distributions”, in 2013. Investors need to be aware that mutual funds provide the chance for capital gains taxes each year. Of course, if investors own mutual funds within a tax protected account this does not apply to them.
For investors that would like the benefits of owning a mutual fund, but are tired of the year-end capital gains taxes; ETFs could be a potentially enticing alternative. You can avoid mutual fund capital gains taxes by investing in ETFs because ETFs don’t have capital gains distributions. Watch the video to learn more about ETFs and how they are more tax efficient investments than mutual funds in most cases.
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