Taxes Should Not Drive Your Investment Decisions

No one likes paying taxes, but when you’re a big-picture investor, sometimes it just makes sense.

(Image credit: DragonImages)

Many investors believe they need to make investment decisions with their tax situation in mind, and they’re often right — but not always.

There’s a phrase that goes, “Don’t let the tax tail wag the dog.” That means you should not try to optimize your investment decisions too much for taxes. My philosophy is quite simple and has done me well over the years: Invest money for growth wisely and let the taxes fall where they may.

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Rob Lutts, Investment Adviser
President and Chief Investment Officer, Cabot Wealth Management

Rob Lutts is the founding partner, president and chief investment officer of Cabot Wealth Management and the author of The Great Game of Business: Investing to Win. He has studied thousands of companies, both domestic and international, over the years, investing and managing portfolios professionally since 1983. He received his MBA in Investments and Finance from the University of Massachusetts in Amherst and his Bachelor of Science degree in Finance and Management from Babson College.