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How savvy investors are using tax-effective strategies

Lucy Forster

In an alternative way to build wealth, savvy investors are turning to certain tax strategies as a means of achieving higher growth.

Through smart and effective trading strategies, Generation Life believes effective tax strategy would deliver higher-than-expected returns through the compounding effects of lowering the tax rate.

The aim of the investment portfolio is for anyone who has a marginal tax rate above 30 per cent to reduce the tax bill to 9-11 per cent and benefiting from the return.

Generation Life’s joint CEO and managing director Catherine van der Veen believes post-election election, which largely centered on tax, was the perfect time to launch.


“The federal election placed the taxation of investments front and centre on the national agenda, and reiterated how important delivering real after tax returns to investors is,” said Ms van der Veen.

“However, in Australia, where our share market has special tax rules, disregarding the impact of these costs can have significant, negative impacts on post-tax investment returns. In fact, buying into unit trusts directly can force significant tax liabilities onto the investor at the end of each financial year,” continued Ms van der Veen.

Generation Life’s other joint CEO and managing director Lucy Forster noted the returns are 40 basis points higher than the market since launching.

Ms Forster believes the compounding effect of reducing tax is one of the main ways for Australians to build wealth.

“Our modelling shows that tax can be the single biggest drag on what an investor can receive from their investment. The recent focus on lowering investment fees and the effect that has on performance has led to the rise of index-based investing,” Ms Forster said.

“While focusing on fees has merit, the reality is that the biggest cost of any successful investment is tax. Our analysis has shown that this new fund can improve take-home return by 56 per cent.”

Commenting generally on after-tax investment management, Caroline Bennet, Deloitte Actuaries partner, noted: “After-tax returns are important for investors as this represents the amount of returns actually generated for reinvestment, and as a result, over time form the basis of the compounding investment return”.

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How savvy investors are using tax-effective strategies
Lucy Forster
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Cameron Micallef

Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets. 

Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.

You can contact him on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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