Which Tax Pill do you want to swallow?

Most Kiwi investors know about tax on their salary or earnt income, but far fewer understand how investment tax actually works.

In this episode, Tim and Brodie break down three of the most important tax concepts for investors: PIE tax, Foreign Investment Fund (FIF) tax, and the differences between the FDR and CV calculation methods. They explain why many investors receive tax reports this time of year, how overseas investments are taxed, when you may have choices around how your tax is calculated, and why fees and tax efficiency can have a significant impact on long-term returns.

Whether you're investing through KiwiSaver, managed funds, or holding overseas shares directly, this episode will help you better understand your obligations and opportunities as an investor.

This episode contains general information only and should not be considered tax or financial advice. Please seek professional advice appropriate to your circumstances.

If you have a question, suggestions, or a topic you would like us to cover, please send an email to: podcast@foxplan.nz

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The information shared on The Dollars & Sense Podcast is general in nature and does not consider your individual circumstances. Dollars & Sense exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Tim Ellis (FSP778196) and Brodie Haggerty (FSP778174) are both Financial Advisers providing advice on behalf of FoxPlan Ltd. FoxPlan Ltd (FSP39630) is a licensed Financial Advice Provider. Important information can be found at www.foxplan.nz/disclosure 

Transcript

SPEAKER_00 0:00

There's only two certainties in life, and that is death and taxes. Dollars and Sense podcasts, we haven't tried dying very often, so we're gonna focus to the taxes part. Welcome back to another episode of the Dollars and Sense Podcast. This week, once again, you're listening to myself, which is Tim Ellis, sitting right next to me, my co-host and business partner, Brody Haggerty. Brody, thank you for coming back on the show. My pleasure, Tim. Just before we get underway with this week's episode, uh, once again and and uh to a higher degree this time, I think we need to be extremely clear with disclosure.

SPEAKER_02 0:36

Absolutely. So in this week's podcast, we're talking about tax, and neither of us are chartered accountants. That is with that in mind, uh, please take everything we talk about today as general of nature and not personalize financial advice and seek the relevant professionals before making any decisions around your tax.

SPEAKER_00 0:54

Gonna study to become a chartered accountant anytime soon?

SPEAKER_02 0:57

No.

SPEAKER_00 0:58

Any interest?

SPEAKER_02 0:59

No.

SPEAKER_00 1:00

Hmm. Didn't really hesitate there.

SPEAKER_02 1:02

I have a I have an accounting degree. I I'm aware. But I have no inkling to become a chartered accountant. I'm a financial advisor.

SPEAKER_00 1:10

Okay. Same thing, isn't it?

SPEAKER_02 1:11

Oh, totally.

SPEAKER_00 1:13

Okay, so yes, we are gonna do an episode all about tax. Um, mainly three taxes that we're gonna focus on today. Now, the the reason that this episode has come up, uh we are getting inundated now with emails. This time of the year, um, a lot of our clients that use a portal or a platform that we often recommend will have just received an email to say uh your tax report for the last financial year is now available. A lot of these clients, uh if they're new investors or not used to doing their own tax return, don't really know the difference between the different tax structures and different tax methods and have they changed from last year and has a new government made a new rule? So we're just gonna get super clear on uh investment tax. Three different types of uh investment tax that are pretty important to have your head around, what they actually mean and uh how you can apply that to your own situation. Or you could hire an accountant. Or yes, or a lot of people choose that their time is better spent elsewhere and offset it to an accountant.

SPEAKER_02 2:16

Just thought I'd throw that out there.

SPEAKER_00 2:18

Yeah, I just feel like I'm the one that does that, and you don't, you actually do all yours yourself.

SPEAKER_02 2:23

I've got an accounting degree.

SPEAKER_00 2:25

Okay, okay. Sorry, I forgot you're a chartered accountant. Yes. Yes, yes, yes. Um, okay, so uh the three types of tax we're gonna talk through is uh the uh PIE tax. Then we're gonna talk about foreign investment fund tax and the two different methods you can use to calculate how much foreign investment fund tax you must pay within your portfolio. Then we're gonna talk about tax deductibility, uh, what fees can be uh deducted and in which structures, because the rules are not the same for all three structures.

SPEAKER_02 2:56

Yeah, I think it's important to note why it could be relevant for some people, um, especially if you're a DIY investor and you have a Sherzy's account and you might have that in the S P 500, you might have $60,000 sitting over there. Now, a lot of people think, oh, where there there's no capital gains tax in New Zealand, I don't have to pay tax on that. It's all done for me when the dividends come through or whatever. Um that's not completely true. And people can get stung by not realizing they have a tax liability when they do.

SPEAKER_00 3:32

Do you think some people might take the approach of they'll never know? How will they know? Oh, of course, until you get audited. Yeah. That's a great strategy until it until it doesn't work. It's a very cheap one until it's a very expensive one. Correct. So do you want to start with foreign investment fund tax or do you want to start with the easy one with pie tax?

SPEAKER_02 3:50

Uh I think we should start with uh the pie tax, because everyone probably knows that. Everyone's got Kiwi Saver. Three and a half million people pay it. Yeah, yeah. So if you've got KiwiSaver, you're probably paying Pi taxa. Mm-hmm.

SPEAKER_00 4:02

And I highly suspect not many people understand what PyTax is, how it's calculated, or that they're even paying it outside inside the KiwiSaver fund.

SPEAKER_02 4:11

Sure.

SPEAKER_00 4:12

So uh Pi taxa is tax that you pay within an investment fund, to which is a pie fund, a prescribed investment entity. Every KiwiSaver fund is uh a pie fund. Now it's very rigid. I'd like the other two uh tax methods we're gonna discuss in a moment. Pi tax is set purely by your uh PIR rate, which is your prescribed investor rate. The way you get allocated a PIR rate is purely based on your income. So as soon as you earn over a certain amount of money, and I believe it's about $47,500 per annum, then uh you are now on the top tax bracket uh for PIR tax, which is 28%.

SPEAKER_02 4:52

And it's important to note that PI funds and pie tax is all handled internally by the fund already, which is why you don't have to do a tax return if you've got Kiwi Saver, but you're an employee, right?

SPEAKER_00 5:04

Um it's paid within the fund itself. It is no out-of-pocket expense for this. It comes out of the investment itself with no choice if butts or ways around.

SPEAKER_02 5:14

It's it's very simple, right? It's a very simple tax structure. Um you don't have to do a personal tax return, you don't have to do any reporting. Um can be beneficial because it's capped at twenty-eight percent. Um so it's very popular for people. Yeah, so it's very popular for people that don't have investments outside of Kiwi Saver or are j or employees and have no no other assets and therefore don't want to do a tax return. It's a very popular tax structure.

SPEAKER_00 5:46

Okay, so how does it actually work? So uh pie tax, uh let's just use KiwiSaver in this example. If your KiwiSaver or managed fund, if it was in a PI fund um uh attributes $1,000 of taxable income to you during the year, um, that would be your taxable pie income is $1,000, your PIR rate is 28%, you must pay $280 tax. The fund pays the $280 tax to IRD on your behalf, which leaves you with the $720 afterwards. Pie tax also gets attributed to uh fixed interest, so term deposits, and it's at the same rate, that your PIR rate. So if you have a uh a term deposit that uh makes $5,000 of interest a year, you take $5,000 minus 28%. That 28% is how much tax you have to pay, which would be $1,400, and you keep the other $3,600.

SPEAKER_02 6:45

For argument's sake, people might be sitting there thinking there's no there's no tax on capital gains. So if you've got $1,000 in your portfolio and that goes up by $500, are they paying tax on that gain?

SPEAKER_00 7:00

So you're right, we don't have capital gains in New Zealand. However, that's not the same in other countries in the developed world. US being the biggest example here is a lot of KiwiSavers, uh a lot of different KiwiSaver funds are very heavily invested in the US. Now, in the US, if you make money off investing in stocks, their IRS, which is our IRD, want to be paid. Correct. So if it's fair for US citizens to have to pay tax to make money off stocks, do you think they're gonna let another country come in, make money off the same stocks and not have to pay any tax?

SPEAKER_02 7:36

Of course not.

SPEAKER_00 7:37

No, they're gonna want to be paid. So you are not subject to US tax rules, obligations, or laws, you have uh what we have foreign investment fund tax rules and a pie fund, um, you're still capped at 28%, uh, but that applies to investments outside of New Zealand and Australia.

SPEAKER_02 7:57

Thank you.

SPEAKER_00 7:58

So if you had a KiwiSaver fund that only invested in New Zealand or Australian stocks and did not invest in any other country's stocks, sure, you wouldn't have to pay any capital gain tax on your stock. That sounds pretty good, doesn't it? To have all of your eggs in one small country that's 0.4% of the world's GDP, great idea. Can I remind you we did this disclosure at the start. And that was satire. Yeah, yeah.

SPEAKER_02 8:23

Well, I I th I'm just being sarcastic because I'm trying to point out that tax shouldn't be the only decision maker in your investment decisions, right? You shouldn't you shouldn't make investment decisions just to avoid some tax. Correct.

SPEAKER_00 8:37

Um so the phrase uh I think this was Taylor Schulter's phrase don't let the tax tail wag the investment dog. Yeah, that makes sense. Minimize it, but don't let it lead decisions. I think on that one we were talking about um uh selling uh individual stocks that you've been attributed to by by your company. Okay. So I I I'd argue pie tax is pretty much unavoidable. Um, you know, for anybody that is uh contributing to KiwiSaver, anybody with KiwiSaver, which is three and a half million of us, um they'll be paying pie tax and it's not not really a flexible rate.

SPEAKER_02 9:15

Yeah, I think it's again important to note we're not trying to evade tax or anything when we're having these discussions, we're trying to pay the right amount.

SPEAKER_00 9:24

Are you getting afraid that I'm gonna start talking about ways to minimize tax?

SPEAKER_02 9:28

Yeah, yeah, yeah, yeah, yeah. Because we are trying to minimize it, but we're not trying to do anything that's not available legally, right?

SPEAKER_00 9:36

Very important. I think if we're gonna be clear on a few things also, it's pretty important to be clear that the the 28% is applied to the taxable income generated by the pie, not to the value of the investment. So if you've supplied the right PIR rate, first of all, um, yeah, uh actually, good point. A call to listeners, please make sure that you're on the right PIR rate. I I have come across people that are not on the right PIR rate. People that have retired um might think that, oh, well, if it's based on my income, I'm on the lowest um PIR rate. Well, what other income needs to be factored into that? Rental properties, pensions, plenty of other areas. Um, the maximum PIR uh for individuals 28%, um, which is why pie investments can be tax efficient for people who have uh have marginal income tax rate of 30, 33, or or for a lot of our clients 39%.

SPEAKER_01 10:29

Yep.

SPEAKER_00 10:30

So um why PIR tax can look different? Uh you know, why the calculation can look different from the actual fund return, like you've already touched on here. The the fund uh manager for managed funds and kiwi saver funds, the fund manager doesn't simply tax the unit balance growth. Instead, they calculate your share of the fund's uh taxable income, which is your interest, your dividends, your realized gains where where they're applicable, um, foreign investment fund uh income and expenses, uh, and then they apply your PIR to that amount. So that means a fund might return 10% in a year, but the taxable income may be more or less than the increase in in your actual account balance.

SPEAKER_01 11:16

Mm-hmm.

SPEAKER_00 11:17

All right. Are we moving past that and and now on to the more uh complicated and decision-making tax minimization opportunities?

SPEAKER_02 11:25

Yep. So you're speaking if you're invested in a unit trust rather than a PIA.

SPEAKER_00 11:30

Yeah, or just individually held ETFs. Yeah. Plenty of other um ways that this could actually be applied. But we we're talking really about foreign investment funds, uh which is uh again owning stocks in companies outside of New Zealand and Australia.

unknown 11:48

Yep.

SPEAKER_00 11:48

Most common example would have to be Australia. Uh is it would have to be United States. Yeah, but not not necessarily. Okay. Because there is an exemption. Oh, if you have less than 50,000. Correct. Oh yeah, sure. Okay. Thank you for pointing that out. There comes your accounting degree in in practice. You know what it's called? Yeah, the de minimis. Nice. So if uh the foreign investment fund tax only applies if you have more than 50,000 invested in foreign investment funds. NZ50,000. NZ50,000. Again, accounting degree, saving the day to day. So if you're uh investing in Bali, it's not 50,000 Indonesian rupees, uh, Brody. Do you do you still hold a few of those? Yeah, I do. 50,000 rupee, that's that a uh a Red Bull?

SPEAKER_02 12:36

0.5 cents. Oh, is it?

SPEAKER_00 12:38

Yeah, not even cents, I don't think. Oh, 50,000 uh NZD. So foreign investment fund income. There's two different methods that you can use to calculate how much foreign investment fund tax you must pay from your investments. Um the first one uh is known as uh comparative value, C V, quite often referred to as just C V.

SPEAKER_02 13:03

Yep.

SPEAKER_00 13:05

I fear that not as many clients as I'd like to admit know about the two different methods you get to choose from each year.

SPEAKER_02 13:15

Yeah, well it's pretty niche, and a lot of the time this is what the accountants for, right? They they choose which is the best method to apply to your tax situation.

SPEAKER_00 13:25

I'm also hoping that accountants do that. Well rather than doing it one way that they know.

SPEAKER_02 13:31

I mean, the the tax reports that we give them from any investments our clients are in, uh you know, it has both of the methods there worked out for them so they can choose, right?

SPEAKER_00 13:40

Yes. Yeah. You we actually encourage them to work out both methods, which we're about to mention very soon, by the way. Um but we ask them to calculate both methods and then choose the one that they want to pay. The bigger amount or the smaller amount. Now.

SPEAKER_02 13:59

Yeah, well, I think tax is is important, but you don't want to give them a tip, do you?

SPEAKER_00 14:03

Well, not unless you uh trying to do skiing. Spending kids' inheritance.

SPEAKER_02 14:09

Uh-huh.

SPEAKER_00 14:09

That'd probably be the only 0000.1% time that you would do that.

SPEAKER_02 14:13

Interesting way to spend the kids' inheritance on tax rather than a holiday.

SPEAKER_00 14:18

Well, look, I haven't met one of the 0000.1%, but I'm trying to think of who on earth would want to pay more. Yeah, agreed. So what are the what are the two different Okay? So let's start with comparative value method. It's a way of calculating taxable income on um certain overseas investments uh under New Zealand foreign investment fund rules. So the basic rule is it's pretty simple, actually. You're taxed on the actual gain or or loss of your investment during that tax year. So the formula looks like uh fifth income equals closing value minus the opening value plus distributions minus purchases.

SPEAKER_02 14:57

So what you what you're saying is you're paying tax on the actual annual amount, the actual annual movement. Yes. Yeah. So if there's a negative year, which does happen, which does happen quite a lot, you're not gonna pay any tax.

SPEAKER_00 15:11

Correct. That would be one of the times where you would probably want to use the C V method. Um how it looks in practice. Uh and sorry for anyone wondering when as I was going through that formula, opening value just means the market value on the investments as of April 1. Uh, the closing value is the market value of the investments on 31st of March following year. Distributions is uh most commonly dividends um or any other distributions received during the year. Uh, and purchases is money that you've put into the investment during the year. Thank you for your attempt at de-jargain that. Do what are you trying to say I didn't de-jargon it?

SPEAKER_02 15:51

No, you did.

SPEAKER_00 15:52

You did well.

SPEAKER_02 15:52

I just thought the formula was pretty jargony, so I'm glad you cleared that up.

SPEAKER_00 15:56

Well, that's why I put that in there. Yeah. So I didn't think you'd pull me that up on that because you're the accountant in the room.

SPEAKER_02 16:02

I'm also an advisor that understands that jargon doesn't help sometimes. Okay.

SPEAKER_00 16:06

So uh do you do you want to see an example? Because I've prepared an example as well.

SPEAKER_02 16:11

Uh yeah, I mean you can.

SPEAKER_00 16:13

All right. So suppose on April 1, uh you own overseas share portfolio worth $100,000. New Zealand dollars. Yes. Um, so during the year, your investment uh you invested in another $20,000. Um you received $3,000 of dividends from your already owned shares. Uh, and on 31st of March, the portfolio is now worth $135,000.

SPEAKER_01 16:33

Yep.

SPEAKER_00 16:34

Your fifth income tax is the $135,000 it is now minus what it was on April 1, which is $100,000, plus $3,000 for the dividends that you've received, minus the $20,000 that you've put in. That equals $18,000. Yep. So that means $18,000 is added to your taxable income for the year.

SPEAKER_02 16:57

Correct.

SPEAKER_00 16:59

$18,000 times your marginal tax rate, say it's 33%, 5,940.

SPEAKER_01 17:07

Yeah.

SPEAKER_00 17:08

So uh if you had a 15% return, that was a return on investment there. You're gonna have to pay 5,940.

SPEAKER_02 17:16

Yeah.

SPEAKER_00 17:17

So then if we if we flip that on on its head and do the other version, where we had a less than 15% return. Yep. Uh let's say we had a negative return. I just thought I'd give a bit of an example of what happens when your opening value was a hundred thousand, you didn't put any money in, you had no dividends, the closing um value was ninety thousand because we actually had a loss. Well, now you go ninety thousand minus a hundred thousand equals negative ten thousand. The result is a loss. Correct. Under the C V method. Yes. So in plain English, think of the C V method as asking um how much wealth did uh the overseas investments actually create or destroy for me during the year. It looks like how much the investment increased or decreased in value, plus any cash or distributions that you received, because even when the market's going down, you still will receive dividends from a lot of the stocks and a lot of the portfolios we use. Um, less any new money that you've put in, the result is your fifth income or loss for for that year that you have to pay tax on based off your marginal tax rate.

SPEAKER_02 18:25

So if you made a loss, can you get tax back?

SPEAKER_00 18:28

Good luck.

SPEAKER_02 18:30

You just won't have to pay any.

SPEAKER_00 18:32

Correct. But that's only if we're looking at the C V method.

SPEAKER_02 18:37

Yeah.

SPEAKER_00 18:37

The other method for calculating your foreign investment fund tax is the uh FDR, also known as the fair dividend rate. Now, I did my attempt at de-jargaining things on the first one. Are you gonna tackle this one? I can definitely give it a go.

SPEAKER_02 18:51

Um so the fair dividend rate is uh actual return doesn't matter. That's right. So the taxable income is gonna be five percent of opening market value. Five percent. No matter what it does.

SPEAKER_00 19:03

Yep, just five percent. Straight off the off the cuff.

SPEAKER_02 19:06

So you can see there, and I'm sure you've got another example with your hundred thousand.

SPEAKER_00 19:10

Mm-hmm.

SPEAKER_02 19:11

That if you made an 18 pen eighteen percent return that year, perhaps the FDR rate where you're paying five percent. Capped. Capped.

SPEAKER_00 19:20

I would probably choose that one in a positive year of fifteen thousand.

SPEAKER_02 19:23

Yeah.

SPEAKER_00 19:24

Now, would I want to pay five percent in a year that I've run a loss? No. No. I don't want to pay any tax if I've run a loss.

SPEAKER_02 19:33

Yeah.

SPEAKER_00 19:34

So let's look at this. Um, so uh FDR, foreign investment fund income equals five percent of the opening market value. So if I have a hundred thousand dollar portfolio at the start of April 1, 5% of that is $5,000. That's what I must pay tax on. So if my marginal tax rate is 33%, that means I have to pay $1,650. So that doesn't matter whether the portmole portfolio shifted up or down, that's how much foreign investment fund tax I've got to pay in that year. So if the market has gone absolutely booming, I would quite like to cap the amount of tax I have to pay to 1,650. Um, but if the market had gone down and I'd run a loss, I would feel pretty upset to pay money for a loss.

SPEAKER_02 20:22

Correct.

SPEAKER_00 20:24

That's when you file your fire your financial advisor, isn't it? When you pay fees and get a loss in your portfolio.

SPEAKER_02 20:30

Oh yeah, because that never happens.

SPEAKER_00 20:32

Well, that's the advertising that I keep seeing.

SPEAKER_02 20:35

So I mean that that's why it's important, right? To um know what you're in, because if pie funds don't have that flexibility, do they? No, one option. So unit trust, individual shares of of foreign investments, you have that flexibility to choose. If there's a loss, you choose one. And if there's a big gain, you choose another. It's not that simple, obviously, but um kind of is. Well, it kind of is, yeah. You've you've got that flexibility. And another thing you can do is you can actually deduct fees.

SPEAKER_00 21:03

That that I mean that's my last point. You you're taking all the sting out of my my punch. Oh, sorry, mate. No, that's okay. Why don't you yeah, yeah, you you take take take it away. Talk us through that.

SPEAKER_02 21:12

Well, I think that's that's just it right there. You can deduct your fees.

SPEAKER_00 21:16

Deduct your fees. Yes.

SPEAKER_02 21:17

So if you're paying my dry cleaning fee or if you're paying your advisor a fee to manage that fund, that is an expense. Can I do that with a PyFund? No, you cannot. Mm-hmm. Can I do it with Because the Python's all wrapped up and bundled and taken care of it's all taken care for you, it's all yeah.

SPEAKER_00 21:35

You mean the IAD get their money without any intervention whatsoever. Correct.

SPEAKER_02 21:39

Nice and easy.

SPEAKER_00 21:40

Yep, straight from the source. Yeah. Just take it.

SPEAKER_02 21:43

Whereas with the unit trusts or individual shares or whatever however you have it structured, if it's not in a Py fund, then you have that flexibility, and part of that flexibility is you can deduct fees. Mm-hmm. Because fees are part of if you think about why tax w how you can deduct tax from a business, right? You Deduct your expenses. But when you drive to a client meeting, you can deduct that as an expense because you are performing an act of generating a profit. An advisor fee is part of generating a profit in an investment. So therefore it's tax deductible.

SPEAKER_00 22:17

Yeah. Much like I work out of my home quite often. Home office expense. Home office expense. That's right. Audit him right now. Well, see, now that's why I said that. So that if I am audited, there's evidence that no, I actually do often quite work from home. Whenever my children are in daycare in school, I'm happy to work from home. Yeah. Look at him go, he's covering his tracks, guys. What I'm not happy about is I cannot claim childcare as a business expense. But I know very well that I cannot work from home if the kids are there. It does not work. Doesn't happen. That is the most legitimate business expense I've ever heard of in my life. Yes. Anyway, in fear of um getting audited, should we move on? Because I think there's another one that's been missed here. Now, this one's unusual. Uh it would only apply to a particular set of clients or DIY investors. But what about the fact that you don't actually need to use your investment to pay your tax obligations? Tell me more. In a pie fund, the money's taken at the source. No intervention, no friction, it's just taken out of the investment. Correct? When it comes to foreign investment fund tax or any tax obligation whatsoever with a managed fund, the money doesn't have to come out of the fund. That tax bill could be paid with an out-of-pocket expense. Now, that's a sting. People m don't love having a big out-of-pocket expense coming out of their bank account.

SPEAKER_02 23:44

No, it's a mindset thing, right? It's a mental barrier.

SPEAKER_00 23:48

Absolutely a mindset thing. So you might look at it as, well, that's a little bit of a pain, but that's how much money extra money you are leaving invested in the market. Where if you pay your tax obligations from within your fund, that's taking money out of the market and giving it to the IRD market. And I don't think they're as good at spending the money as it could be invested. Oh, getting political. Well, we're about to have our first politician come on the show soon. So I think we need to start thinking that way. Okay. I I think it would be pretty wise for uh us to uh tell listeners how you can actually execute this, by the way. So uh like I said at the start of this episode, the reason this episode's coming up now is a lot of our clients have just received an email saying here is your tax report for last financial year, um, and here are all the the different columns that you need to know when doing your um tax return. And here's how to calculate the CV method or the FDR method to figure out which one you want to uh include in your tax return. So what that means is people uh basically uh after the 31st of March each year or after 1st of April, you're then able to go in and file your tax return for the previous financial year that's just ended. You need a tax report from your investments to be able to do that, to know what to enter. But um by going through both the CV method and calculating what that looks like, and then going through the FDR method and calculating what that looks like, that will tell you which method you should use when you actually go in to do your uh tax return online.

SPEAKER_02 25:29

Yeah, it's not that simple though, is it? Actually filling the format.

SPEAKER_00 25:34

Oh, I think it could use a little bit of guidance the first couple of times around, but uh, for a lot of my clients they've worked out how to do that themselves. Some people just don't even want to bother thinking about it and they pay our accountants to do it for them. Look, I I think we have managed to almost get a full episode dedicated fully to tax. Uh, what what are the key takeaways? Why are we bothering doing this episode? What do you want our listeners to hear from this?

SPEAKER_02 25:59

I'm not sure, Tim. This is your idea, this one, to talk about tax. So you tell us what you want and get out of this.

SPEAKER_00 26:04

Okay, I want um do-it-yourself investors to know that you do have some obligations and you do have some choices and options. I want people that consider only pie funds to start thinking a little bit broader. And um, you know, what what advantages could there be to consider with other options rather than taking the easy low admin approach to investing? As um uh Taylor Sholdy said, do not let the tax tail wag the investment dog.

SPEAKER_02 26:29

Yeah, it's important it's important to think about how tax actually affects your return in the long run. Now it shouldn't make make you change your decisions in terms of your goals and your strategies and your outcomes.

SPEAKER_00 26:41

But asset allocation or um whether you reinvest dividends or not.

SPEAKER_02 26:46

No. But it's important to minimize the tax or make the tax as efficient as possible so that it doesn't erode into your return over the long term. I couldn't agree more. Same with fees, right? And we've already had that conversation. Fees and tax, they all play a part in your total return over the lifestyle life lifetime of your investment.

SPEAKER_01 27:05

Hmm.

SPEAKER_00 27:06

And a small investment in time and or money to an accountant now could mean a heck of a lot more down the road. Correct. Okay. Well, believe it or not, I have actually enjoyed talking about tax. I don't think we'll do it again next week, but as for this week, that's us.