For the first time in decades, investors have a unique opportunity to grow wealth while keeping more of it. In his recent InvestmentNews contributed article, Senior Wealth Advisor Darnel Bentz explains how today’s evolving strategies and tax laws are creating what he believes is a golden age for tax-efficient investing—or “tax alpha.” With the right guidance, investors can take advantage of tools and strategies that weren’t available just a few years ago to minimize taxes and maximize after-tax returns.

What Is Tax Alpha?

Bentz describes “tax alpha” as the extra value an investor can gain by managing investments in a tax-efficient way. It’s not about taking on more risk or trying to beat the market. Instead, it’s about making informed decisions that may help investors keep more of their returns after taxes.

Strategies can include:

●      Selling certain investments at the right time of year

●      Placing the right types of assets in the right types of accounts

●      Using strategies that help offset gains with losses

●      Planning for major tax or income changes

When done well, tax alpha can meaningfully reduce tax bills and support long-term financial goals. From Bentz’s perspective, it’s one of the most effective—but often overlooked—ways to grow and preserve wealth.

5 Tips for Tax-Efficient Investing

Tax-efficient investing can make a significant difference in a portfolio’s after-tax returns. By strategically placing assets, managing gains and losses, and planning ahead for retirement and year-end moves, investors may be able to grow and preserve wealth more effectively. Here are five practical approaches Bentz employs to help make his clients’ portfolios more tax-efficient.

1. Optimize Asset Location

Where an investor’s investments are held can have a big impact on taxes. Income-heavy or less tax-efficient assets, like high-yield bonds, often belong in retirement or tax-deferred accounts, while tax-efficient investments—such as municipal bonds, qualified dividends, or certain real estate—generally do best in taxable accounts. Strategic placement can preserve after-tax returns without sacrificing diversification.

2. Manage Capital Gains Carefully

Holding investments long enough to qualify for long-term capital gains can reduce taxes significantly. Wealth advisors can help plan sales, offset gains with losses, and manage concentrated positions, so an investor’s portfolio stays diversified without triggering unnecessary tax bills.

3. Stay Flexible with Legislation and Markets

Tax laws and market conditions change constantly. The most effective plans are flexible and actively managed. Wealth advisors can adjust portfolios, model multiple tax outcomes, and maintain liquidity to help investors navigate uncertainty and take advantage of new opportunities.

4. Plan for Retirement Strategically

Retirement planning can shift the tax landscape. Strategies such as partial Roth conversions during lower-income years can smooth tax burdens and reduce future required minimum distributions (RMDs). Wealth advisors can also help clients weigh lifestyle choices—like working longer or relocating—against their impact on taxes, so they can make informed decisions.

5. Use Year-End Strategies Wisely

Small adjustments near the end of the year can add up. Spreading gains across tax years, harvesting losses, or temporarily borrowing against a portfolio can defer taxes and improve efficiency. Thoughtful year-end planning often delivers meaningful savings over time.

Want to see if your current financial strategy is optimized to minimize taxes and maximize results? Get in touch with a KAR Wealth Advisor.

Read the Full Article

You can read Darnel’s full contributed article here:
Why now is the best time I’ve seen in 25 Years for creating “tax alpha”