Invest with Purpose and Keep More of What You Build.
You have spent years saving and investing. Your financial plan should help that money support your lifestyle, provide for loved ones, and avoid unnecessary taxes.
Investment returns matter, but so does how much you keep after taxes and what your money is meant to accomplish.
Give Every Dollar a Purpose
A bucket strategy connects your investments to when you expect to use them.
- Grill Bucket: 1 to 5 Years
Money for upcoming expenses, retirement income, and planned purchases. These investments generally emphasize liquidity and stability because you may need them soon. - Fridge Bucket: 6 to 10 Years
Money for the next stage of retirement. Investments can balance growth opportunities with preparing for future withdrawals. - Freezer Bucket: 10 Plus Years
Money for longer-term needs. A longer timeline may allow greater exposure to growth investments, depending on your risk tolerance and overall plan. - Legacy Bucket: Beyond Your Lifetime
Money intended for loved ones or charitable causes. The investment strategy should consider your beneficiaries, when they may need the assets, and the taxes they could face.
These buckets describe the purpose of your money. They can include different account types, each with its own tax treatment.
Ways to Keep More of Your Wealth
Thoughtful planning may help reduce the amount of your wealth that goes toward taxes.
Consider Roth Opportunities
Qualified Roth IRA withdrawals are tax-free. A Roth conversion may help manage future taxes, but the taxable portion creates income in the year of conversion. Compare the cost today with the potential benefit later.¹
Use Investment Losses Strategically
Selling investments at a loss in a taxable account may offset capital gains. This approach should support your investment plan and account for wash sale rules, which can disallow losses when substantially identical investments are purchased within 30 days before or after the sale.²
Plan When to Take Gains and Withdrawals
Coordinating investment sales and retirement withdrawals may help manage taxable income. The investments you sell, the accounts you draw from, and the timing can affect what you keep.¹
Be Intentional About What You Leave
Certain inherited investments generally receive a cost basis adjustment to their value at death, which may reduce taxable gains when beneficiaries sell. Lifetime gifts generally follow different basis rules, and traditional retirement accounts do not receive the same treatment.³
Give With Tax Efficiency in Mind
Donating appreciated investments held longer than one year directly to a qualifying charity may avoid realizing capital gains and may provide a deduction, subject to applicable rules. Eligible IRA owners can also consider qualified charitable distributions, which may exclude qualifying gifts from taxable income.⁴
Bring Your Investments and Legacy Together
Your buckets, investment choices, and tax strategy should work together. First, account for your own retirement and future needs. Then consider how remaining assets can support the people and causes you care about.
Review these decisions with your financial advisor and tax professional. The goal is to make informed choices that help your wealth go further.
Want an investment strategy built around your retirement, family, and legacy goals? Schedule a conversation with our team.
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Disclosure:
BCA is a Securities and Exchange Commission registered investment advisor. The advisory services of BCA Private Wealth are not made available in any jurisdiction in which BCA Private Wealth is not registered or is otherwise exempt from registration.
Please review BCA Private Wealth Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.
This material is prepared by BCA Private Wealth for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.
Sources
- Internal Revenue Service – Frequently Asked Questions on Gift Taxes
- Internal Revenue Service – Estate and Gift Taxes
- Internal Revenue Service – Charitable Contribution Deductions
