Spring 2010 issue of Horizons

Raise Your Expectations CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Also, tax efficiency is not limited to the type of investments you own, but also considers how the portfolio is structured. It is more tax-efficient to invest the fixed income portion of your portfolio in your tax-deferred accounts and the equity portion of your portfolio in your taxable accounts. Distributions from your tax-deferred accounts will be taxed as ordinary income, regardless of source. Gains realized in your taxable accounts will be taxed at the preferential capital gains rate. 7. Monitor your managers — Managers’ style, personnel, philosophy and performance can change over time. Therefore, it is important to monitor your managers to ensure they can perform as well in the future as they have in the past.

you can tolerate. Determining how much of your portfolio should be allocated to each asset class depends on your goals and objectives, time horizon and risk tolerance. You should consider only taking on as much risk as required to meet your goals and objectives. 4. Monitor and rebalance your portfolio — It is important to monitor your portfolio periodically to determine if your portfolio is still in line with your target allocations. If your portfolio becomes overweight to any one asset class, rebalance your portfolio back to your target allocations. Rebalancing achieves two objectives: • It maintains the portfolio’s overall risk/return profile. • It forces investors to sell high and buy low. 5. Be cost conscious — Paying too much in fees will drastically affect the performance of your portfolio. Make sure you understand the total cost of your investments. If you are working with a broker or advisor, ask them to help you determine the total cost of your portfolio. These costs include, but are not limited to, manager fees, advisor fees, commissions and transaction fees. 6. Build a tax-efficient portfolio — Tax efficiency plays an important role in building a portfolio to meet your investment objectives. Make sure you have a clear understanding of the tax impact of your investments. For example, weigh the benefits of actively managed mutual funds, exchange traded funds and separately managed accounts as they all have different tax implications and flexibility. Typically, a combination of these investment vehicles will provide the most tax-efficient portfolio.

Questions? Contact:

Mike Ferman, CPA Managing Director RubinBrown Advisors 314.290.3211 mike.ferman@rubinbrown.com Tom Tesar, CPA, CFP Assistant Vice President RubinBrown Advisors 314.290.3297 tom.tesar@rubinbrown.com

8 u sping 2010 issue