With all the ominous talk of tax increases and a “fiscal cliff” if President Barack Obama and Congressional leaders cannot agree on a plan to avert automatic tax increases Dec. 31, some investors may be tempted to act soon to take advantage of current tax rates. But financial advisers say that in their rush to do something this year, investors might end up with regrets.
With the looming “fiscal cliff” on the horizon, in Cincinnati and elsewhere, there is no doubt that investors are sitting on the edge of their seats. And if the President and Congress cannot agree on a plan to stop automatic tax increases set for December 31, some of those investors may be tempted to make hasty decisions in order to take advantage of current tax rates.
But financial advisers warn that “any time you make a decision purely for tax reasons, it has a way of coming back and biting you.”
A recent article in the New York Times, “With Shifts Possible in U.S. Tax Policy, Beware of Sudden Moves,” discusses some of the top areas where short-term trading decisions based solely on taxes could end up hindering long-term investment goals. The article focuses on how to deal with appreciated stock, municipal bonds, real estate and insurance annuities.
The best advice offered by the article, however, is to wait and see. Restraint now could prevent a lot of regret in the future.
If you have any questions about any of the information contained in this blog, see the estate planning website of Cincinnati attorney, David H. Lefton, or contact him at 513-399-PLAN (7526) or by email at dhl@bpbslaw.com.
References: The New York Times (December 2, 2012) “With Shifts Possible in U.S. Tax Policy, Beware of Sudden Moves”
