Tax Efficiency

DEFINITION of 'Tax Efficiency'

An attempt to minimize tax liability when given many different financial decisions. There is a wide variety of tax-efficient vehicles, including tax-efficient mutual funds, irrevocable trusts and tax-exempt commercial paper.

BREAKING DOWN 'Tax Efficiency'

Choosing the best tax-efficient investment can be a daunting task for those with little knowledge of the different types of products available. The best decision may be to contact a financial professional to determine if there is a way for you to make your investments more tax efficient.

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RELATED FAQS
  1. In what ways are ETFs more tax efficient than mutual funds?

    Compare mutual funds and exchange-traded funds to find out which one offers the most advantageous tax position for investors ... Read Answer >>
  2. How can I find tax-exempt mutual funds?

    Learn about finding tax-free mutual funds at major investment firms, including how tax-free funds work and what you should ... Read Answer >>
  3. What advantages do exchange-traded funds have over mutual funds?

    Exchange-Traded Funds (ETFs) are growing ever more popular, as they were created to combine the best characteristics of both ... Read Answer >>
  4. What is the difference between exchange-traded funds and mutual funds?

    Exchange-traded funds, or ETFs, are similar to mutual funds because both instruments bundle together securities to offer ... Read Answer >>
  5. How can retail investors invest in commercial paper?

    Find out how individual retail investors can purchase short-term commercial paper, but why it rarely makes good investment ... Read Answer >>
  6. What are some ways to minimize tax liability?

    Learn what tax strategies are available to individuals and business owners that may allow for a reduction in tax liability ... Read Answer >>
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