What they don't tell you about market returns (and what to do)
Dec 13, 2023
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This podcast uncovers the truth about market returns, revealing how taxes, rebalancing, and inflation chip away at profits. It explores a lesser-known investment strategy and discusses the benefits of annuities in securing market returns.
Taxes can significantly reduce investment returns, with capital gains taxes potentially reaching up to 20% for higher earners.
Rebalancing and inflation can also diminish returns, with transaction fees, capital gains taxes, and the average annual inflation rate reducing a nominal return of 8% to under 5% in real terms.
Deep dives
The impact of taxes on investment returns
Taxes significantly reduce investment returns. Long-term capital gains taxes can be as high as 20% for higher earners, while short-term investments can be taxed at income rates as high as 37%.
The role of rebalancing and inflation in reducing returns
Rebalancing and inflation also diminish investment returns. Rebalancing can result in transaction fees and capital gains taxes, reducing returns by 25 to 50 basis points. When factoring in the average annual US inflation rate of 3.25%, a nominal return of 8% can shrink to under 5% in real terms.
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Uncovering the Truth behind Market Returns and Strategies to Optimize Them
In this eye-opening video, we debunk the myth of stock market returns and dive deep into the factors that chip away at your profits—taxes, rebalancing, and inflation. Learn how these hidden culprits impact your actual returns and discover a lesser-known investment strategy that could be your key to a more secure financial future.