What are tax-advantaged investments?

The term tax-advantaged refers to any type of investment, financial account, or savings plan that is either exempt from taxation, tax-deferred, or that offers other types of tax benefits. Examples of tax-advantaged investments are municipal bonds, partnerships, UITs, and annuities.

Are tax-advantaged investments tax-efficient?

When discussing tax-advantaged investments, there are two sides to consider: individual investments and tax-advantaged accounts. On an individual level, some investments tend to be more tax-efficient and tax-friendly than others. In terms of which types of investments tend to be most tax-efficient, they include:

Should you include tax-advantaged investments in your investment portfolio?

Including tax-advantaged investments in your investment portfolio can help to minimize what you owe on the returns you earn. Tax-advantaged investments can include individual securities but it can also refer to accounts that receive favorable tax treatment. Here’s more on how to leverage tax-advantaged investments in a portfolio.