If you’re anything like me, you’re probably looking to invest better in 2020.
While 2019 has been a bumper year for the S&P/ASX 200 (INDEXASX: XJO), I’m always looking to improve my returns.
The good news is, by considering the tax implications of your ASX portfolio, you can instantly improve your returns.
But the problem is that tax can seem so complicated that it’s impossible to work out the best solution.
So, if you’re in this boat and looking to invest better in 2020, check out these helpful hints to improve your gains next year.
Invest better in 2020 by changing your mindset
One of the first things you need to do to invest better in 2020 is to change the way you think about your ASX portfolio.
All of your gains and losses need to be considered on an after-tax basis. For instance, say you made a 625% return by buying Avita Medical Ltd (ASX: AVH) shares on 2 January this year.
If you sell out now, you’ll be looking at a pretty hefty tax bill for your capital gains. But, if you buy and hold for the long-term you can reduce your tax and time your capital gain better.
The same goes for those ASX losers that you’re holding in your portfolio. Tax loss harvesting involves selling your losers to record a capital loss (which reduces your overall portfolio gains) and buying back these same securities at a similar price.
These strategies are not for the average investor, but they can legitimately boost your after-tax returns to invest better in 2020.
Seek out financial advice to level up your game
A good financial advisor could be the key to help you invest better in 2020 and boost your returns.
Investing, and particularly tax, are inherently individual issues. Sitting down with a good accountant or investment professional could help you get your head around your optimal strategy.
Day trading is a fool’s game, but a strong buy-and-hold strategy can still deliver strong returns.
Another great way to improve your risk-adjusted returns is to invest inside of your superannuation account. Super is tax-advantaged (i.e. contributions are taxed at just 15%), which can be a huge benefit.
A well-structured self-managed super fund (SMSF) could also be an option to help you invest better in 2020.
There are a huge number of ways to invest better in 2020. With a little planning and some professional advice, you could boost your risk-adjusted returns next year.