GLOSSARY TERM
Tax-Efficient Investing
Tax-efficient investing means arranging your investments in a way that reduces unnecessary taxes.
What does this mean in practice?
This can include avoiding unnecessary selling, choosing simpler long-term strategies and using fund types or account structures that may be more efficient under local tax rules. The goal is not to avoid tax completely, but to avoid paying more than necessary or paying it sooner than needed.
Example
An investor follows a simple buy-and-hold strategy and avoids frequent trading that could trigger taxes again and again. Over time, more money stays invested.
Why it matters
Lower taxes can leave more money in the portfolio, and that money can continue compounding. Over many years, tax efficiency can make a meaningful difference to net return.
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