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November 04.2025
2 Minutes Read

Mastering Asset Location: Reduce Your Investment Tax Drag

Graph illustrating increase with upward arrow, reduce investment tax drag.

Understanding the Tax Landscape: How To Keep Your Earnings

In the fast-paced world of investment, it’s not just about how much you earn, but how much you get to keep after taxes. This is essential knowledge for all investors, especially high net-worth individuals who often face significant tax liabilities that can erode their hard-earned returns. As highlighted in our recent insights, strategies aimed at optimizing tax efficiency through a principle called asset location can greatly enhance your investment outcomes.

Decoding Asset Location: A Key to Reducing Tax Drag

Asset location refers to the financial strategy of placing your investments in various account types—taxable, tax-deferred, and tax-exempt—according to their specific tax treatments. Many investors confuse this with asset allocation, which is about spreading investments across different types of assets based on risk and return.

In this optimization process, understanding the characteristics of different accounts is vital. For instance:

  • Taxable Accounts: These include brokerage and trust accounts, subject to taxes on dividends and capital gains. While they offer flexibility, investment income can be heavily taxed.
  • Tax-Deferred Accounts: Retirement accounts like 401(k)s allow your investments to grow without immediate taxes, with taxes hitting at withdrawal, usually at higher rates for wealthy individuals.
  • Tax-Free Accounts: Roth IRAs provide benefits of tax-free growth and withdrawals, making them a preferred choice for high-growth investments.

The Impact of Smart Tax Planning on Wealth Building

Implementing solid asset location strategies not only minimizes taxable income but can potentially allow up to a 6% increase in long-term wealth accumulation over decades. Consider this: by making informed decisions about where to place your investments, one can significantly reduce tax drag, which refers to the erosion of true portfolio gains due to taxes. This not only improves wealth but enhances overall financial freedom.

For instance, placing high-yield bond funds into tax-deferred accounts can minimize immediate tax liabilities while allowing investments to grow. Conversely, tax-efficient assets such as municipal bonds might flourish in taxable accounts.

A Best Practice: Embracing the Yield-Split Method

One particularly effective method to boost tax efficiency is known as the yield-split strategy. This approach involves segmenting investments into different categories based on their yield and tax efficiency. Advisors can then recommend positioning tax-inefficient assets in tax-advantaged accounts while utilizing lower-yield investments in taxable accounts. This strategy not only preserves capital but also enhances net returns over time.

For instance, shifting from a broad market index fund to a split portfolio of growth and value funds allows investors to maintain comparable overall performance while benefiting from significant tax savings.

Final Thoughts: Navigating Your Financial Success

As you consider your investment strategies, remember that tax efficiency is just as vital as return on investment. By mastering asset location and embracing strategies like yield-splitting, you can ensure that you retain more of your wealth, navigating the intricate landscape of taxes and maximizing your financial potential.

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02.20.2026

Citywide Adaptive Reuse Ordinance: Transforming Vacant Buildings into Homes

Update Transforming Vacancies into Vibrant Homes: A New Ordinance in LA As 2026 unfolds, Los Angeles stands at a crossroads, grappling with a considerable office vacancy rate of 23% while facing an acute housing shortage. With over 50 million square feet of empty office and retail space, the city is seeking innovative solutions to tackle these pressing challenges. Enter the newly adopted Citywide Adaptive Reuse Ordinance, a bold policy shift that could pave the way for repurposing underutilized buildings into multifamily housing. Understanding the Adaptive Reuse Movement This new ordinance, effective February 1, 2026, builds on previous efforts that began with the original Adaptive Reuse Ordinance in 1999, primarily benefiting downtown Los Angeles. This earlier initiative transformed over 12,000 outdated units into vibrant lofts and apartments through streamlined processes and zoning incentives. The expansion to a citywide effort means more opportunities for neighborhoods to thrive by turning vacant spaces into homes. Key Features of the Citywide Adaptive Reuse Ordinance One of the ordinance’s most significant changes is the expanded eligibility for buildings. Whereas previous laws focused on structures older than 1974, the new rule allows conversions of buildings that are merely 15 years old and up. Parking structures and hotels are included too, opening avenues that were previously overlooked. An essential addition is the removal of geographic restrictions. Previously confined to specific areas like Hollywood and Koreatown, adaptive reuse is now viable citywide, empowering development in previously excluded neighborhoods. This flexibility not only accelerates approval but also lessens complications that have historically plagued such projects. Streamlined Processes and Incentives Fueling Development Efforts to simplify the entitlement process significantly benefit developers. Buildings over 15 years old can now secure permits more swiftly, while slightly younger structures have a clearer pathway to approval. Moreover, developers face fewer zoning hurdles—minimum unit size and existing floor area standards are more flexible, enticing investment. A Dual Solution to Housing and Economic Issues The Citywide Adaptive Reuse Ordinance emerges as a double-edged sword—it addresses the critical housing crisis while offering a lifeline to business owners with vacant properties. With office occupancy unlikely to revert to pre-pandemic levels soon, transforming these spaces into residential locales serves as a practical resolution to the pressing needs of LA’s dynamic population. Looking Ahead: Community Impact and Opportunities The ripple effects of this ordinance will likely extend beyond just housing availability. By revitalizing neighborhoods, enhancing community identity, and fostering economic growth, new energy can be infused into areas that have long been stagnant. As community members observe the transformations, there’s potential for a renewed spirit of engagement and investment in local life. Adaptive reuse is more than just policy; it's a chance to reshape Los Angeles and breathe life back into communities. The success of this initiative holds the promise of a future where every empty space contributes to the rich tapestry of the city’s character.

02.17.2026

Passenger Traffic Decline: What's Next for Los Angeles Airports?

Update Major Airports in LA Experience Significant Passenger Declines In a surprising development for the travel industry, the four primary airports serving Los Angeles County have reported a notable decrease in passenger traffic for 2025. Collectively, Los Angeles International Airport, Ontario International, Hollywood Burbank, and Long Beach Airport saw a drop of 3.7%, totaling approximately 90.9 million travelers. This decline marks the first major downturn since the COVID-19 pandemic reshaped air travel dynamics. Understanding the Factors Behind the Decline Experts have identified a multifaceted array of reasons contributing to this slump. Ben Mutzabaugh, a travel industry analyst, emphasizes how reduced travel from Asian countries, particularly China, has significantly impacted these airports. Additionally, the economic climate — influenced by tariff uncertainties and a new administration's policies — has exacerbated traveler hesitance. Even natural disasters, like the recent Palisades and Eaton fires, negatively affected initial booking rates. Spotlight on Long Beach Airport's Challenges Long Beach Airport faced the steepest decline of nearly 8%, driven largely by operational challenges at Southwest Airlines, the airport's primary carrier. Changes such as the introduction of baggage fees and a shift from open seating to assigned boarding have caused dissatisfaction among passengers. This adjustment coincides with Southwest's strategic capacity reductions based on their evaluation of demand at these airports, which directly correlates to Long Beach's lowered numbers. Local Trends in Air Travel Interestingly, while passenger numbers fell at key airports, Ontario International managed a small uptick of 0.5%. This contrasts sharply with the sharp declines seen elsewhere. Such disparities highlight a shifting landscape in local air travel, as some airports adapt more successfully to the changing demands of travelers and market conditions. Conclusion: Implications for the Future of Air Travel in LA As Los Angeles navigates these travel declines, local dynamics suggest that strategies need to be re-evaluated. With ongoing challenges and recovery efforts in sight, it's crucial for these airports to adopt innovative approaches that prioritize passenger satisfaction and foster a more resilient travel environment. Understanding these trends is imperative for stakeholders looking to revitalize air travel in this bustling region.

02.17.2026

How Los Angeles' Adaptive Reuse Ordinance Will Transform Housing Options

Update A New Era in Housing: Los Angeles’ Adaptive Reuse Ordinance As the city of Los Angeles embraces its adaptive reuse ordinance, the landscape of residential development is undergoing a seismic shift. Set in motion on February 1, 2026, the updated ordinance aims to stimulate housing production by making it easier to convert underutilized commercial buildings into vibrant living spaces, an exhilarating prospect for anyone following the city's housing trends. Unpacking the Changes: What’s New in the Policy? The most striking aspect of the new ordinance is its expansion beyond previous limitations. Previously restricted to structures built before 1974, the eligibility now includes buildings as young as 15 years old. This rolling 15-year rule not only streamlines the approval process but also includes numerous incentives for including affordable housing units, allowing for unlimited density bonuses and even the potential for added stories. The shift aims to breathe new life into the thousands of square feet of vacant office space scattered throughout the city. Championing Sustainability and Community More than just a response to the housing crisis, the adaptive reuse ordinance is also seen as a sustainability initiative. By repurposing existing structures, the city hopes to reduce demolition waste and preserve the architectural elements that give neighborhoods their character. This aligns perfectly with Los Angeles’s efforts to mitigate urban sprawl and create more livable spaces. Current Market Context: A Push for New Housing As reported by CBRE, Los Angeles ranks second in the nation for housing transformation projects, trailing only behind Manhattan. The recent ordinance updates are expected to unlock thousands of commercial properties for residential conversion, transforming not only the skyline but also community engagement across the city. Local developers, like Jamison Properties, are already at the forefront, converting long-vacant office spaces into apartments, demonstrating the practical implications of the new policy. The Road Ahead: Future Projects on the Horizon Developers and city planners are excited about the potential projects that could emerge from this ordinance. For example, similar efforts seen in Santa Ana showcase how lesser-known buildings can be transformed into functional, residential units. This paves the way for more community-focused developments that blend commercial vitality with residential convenience. Conclusion: What This Means for Residents For the citizens of Los Angeles, the implications of the adaptive reuse ordinance are profound. Not only does it create the potential for more affordable housing options, but it also contributes significantly to creating districts that thrive year-round, transforming formerly dormant neighborhoods into lively, engaging spaces. Engaging with our city's housing initiatives is critically important as Los Angeles redefines its landscape. As community members, staying informed and involved in local projects is crucial to ensuring that these transformations benefit everyone, fostering a prosperous and vibrant community for all.

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