Benefits of Traditional Asset Classes for Taxable Individuals

Abstract

In this article, the author discusses the importance of leveraging the benefits of asset allocation for taxable investors. The author describes the benefits and challenges of investing in traditional asset classes and sub-asset classes for “Mr. Generous,” a hypothetical case study investor. The article begins with a discussion of the broad asset classes of fixed income and equities, the choice of active versus passive management, and then an in-depth description of the advantages of the growth style of investing for taxable investors. The author also addresses the benefits and challenges of investing in international equities, as well as in mid and small capitalization domestic stocks. Finally, considerable attention and detail is devoted to describing proven tools and techniques for managing portfolios for optimal tax efficiency.