How should I be investing right now?
Our view on how to approach a changing market environment: It’s not what you earn, it’s what you keep.
Softer hiring data, cooling inflation readings, and lower short-term Treasury yields all point in the same direction: the economy is finding its balance, and the pressure on the Federal Reserve to tighten further has eased. Yet while certain sectors show signs of slowing, major equity indices continue to hover near record highs. However, the combination of index level resilience mixed with sector specific cooling is precisely the environment where investors can get caught flat-footed. So, the question isn't whether to stay invested. It's how to stay invested wisely.
After-tax returns are paramount
When markets climb, portfolios accumulate embedded gains. That's a good problem to have until repositioning triggers a tax bill that quietly erodes years of appreciation. This is why we believe after-tax returns and tax-efficient asset management deserve the same attention as risk-adjusted returns. What you actually keep, net of taxes, depends on where your assets are held, when gains are realized, and how your investment decisions fit into your holistic financial picture: your income, your charitable intentions, your estate plans, and your business interests.
Tax Efficiency as A Discipline
Our annual service calendar puts tax efficiency front and center in Q1. This allows us to prepare to proactively manage changes through the year and capitalize in opportunistic environments. That means reviewing asset location across taxable and tax-advantaged accounts, identifying opportunities to actively harvest losses throughout the year, and making sure any portfolio repositioning is done with the tax consequences fully in view. You want to continue seizing market appreciation while preparing for a potential softening because in a softer investment environment tax efficiency becomes a key source of compounding. Small improvements in tax efficiency, made consistently, can meaningfully change your long-term outcome.
Let's Look at Your Whole Picture
If it's been a while since your portfolio was reviewed through an after-tax lens, now is an ideal time. We'd welcome the opportunity to walk through your holistic financial picture and identify where tax-efficient strategies can work harder for you. Reach out to schedule your Tax Efficiency Planning review.
Disclosure:
The information presented in this article is intended for general educational purposes and should not be interpreted as individualized financial, investment, tax, or legal advice. Any hypothetical examples, scenarios, or illustrative anecdotes are used strictly to demonstrate financial planning concepts and do not reflect all client results. Because each person’s financial situation is unique, the strategies or ideas discussed may not be appropriate for your circumstances. As an investment adviser representative of a registered investment adviser, we act in a fiduciary capacity and provide advice tailored to each client’s objectives only after adequate understanding of the client’s situation. Before making any financial decisions, please consult with your adviser or another qualified professional.
Hoeven Wealth does not provide tax or legal advice. The tax and estate planning information offered is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
