A comprehensive tax-sensitive plan can help reduce your tax burden

Fidelity has a number of ways to address taxes

Having a tax-sensitive1 plan in place is important—particularly if you have significant assets in taxable accounts.

Taxes can have a big impact on your investment returns at any stage of your investing life. According to Morningstar data, over the 90-year period ending in 2016, investors' annual returns were reduced, on average, by 1–2% due to taxes.2 While this might not sound like much, it could mean giving up thousands of dollars over the course of your lifetime.

Fidelity offers different ways that may help manage, defer, and reduce taxes on your investments


Fidelity offers a variety of ways to take control of taxes on investments. We offer solutions that can help investors defer paying taxes with tax-advantaged accounts, reduce future taxes with various investments and strategies, and manage taxes on an ongoing basis with tax-sensitive investment strategies.

Although some taxes are unavoidable, there are things you can do to take control and potentially reduce their impact on your investments. At Fidelity, we help our clients evaluate their options and make investment choices that make sense for them.

When it comes to a client's actual investments, we offer professionally managed portfolios that apply a variety of tax-sensitive investment strategies to help our clients limit the impact of taxes on their investment returns.

The value of our tax-sensitive investment management over time


This hypothetical example assumes an initial $1 million investment in a Growth Strategy composite (70% stocks/30% bonds and short-term investments), from 1/1/2002 through 12/31/2016, with no contributions or withdrawals. When tax-sensitive investment strategies were applied, the result was an increase in account value of $310,444.3

The impact of these tax savings cumulatively over a decade or more can be very significant, and it's evident that investing with a clear understanding of taxes matters. The above example shows that over 14 years, the potential additional value from tax-sensitive investment management was $310,444.3 To put this into context, a 2016 Fidelity study estimated that a couple retiring today at the age of 65 will need $260,000 to cover medical care costs throughout retirement.4

To create this value, our tax-sensitive investment management approach focuses on applying a variety of strategies throughout the investment process, including funding the account, ongoing management, and making withdrawals.