Contribute to your retirement accounts Investing in retirement accounts removes capital gains taxes from your portfolio. You can buy and sell stocks, bonds, and other assets without incurring capital gains taxes. Withdrawals from traditional IRAs, 401 (k) accounts and the like can result in ordinary income taxes. Rebalancing by selling valued asset classes in a tax-deferred account avoids the capital gains tax normally associated with such transactions.
Additionally, you can even consider buying physical Gold in an IRA to further diversify your retirement portfolio. In the case of traditional retirement accounts, your earnings will be taxed as ordinary income when you withdraw money, but by then, you may be in a lower tax bracket than when you were working. Traditional accounts can defer taxes to a more favorable year, but Roth accounts can avoid them entirely. The tax traps wealth in an investment vehicle that requires special techniques to release capital without penalty. If you donate an appreciated security directly to a charity instead of donating in cash, you can avoid paying capital gain taxes, which is an additional benefit in addition to the tax deduction for charitable contributions.
This reduces your income while you are at the highest levels and eliminates any capital gains as a result of trading on the account. When you're finally ready to sell your investments and withdraw them, any account growth will be taxed at your ordinary income rate, instead of being subject to capital gains like other investment accounts.