Tax free investment instruments are used by investors to take advantage of tax exemptions. Investment gains from these instruments, although subjected to federal taxes, are exempted from State and Local taxes. Different States have different tax rates. For States with high local taxes, it makes more sense to consider investing in the different types of tax free investment instruments.
Your Risk & Tax Management Options
There are several different types of tax free investment instruments for your consideration. Some traditional forms of tax free investment instruments include US savings bonds, treasury bills, securities and notes.
However, for accredited investors, there are additional options for risk and tax management purposes using private placement life insurance.
In essence, Private Placement Insurance policies are variable universal life (VUL) insurance plans wrapped within a private placement offering. VUL is a type of life insurance that allows the contract owners to invest in a wide variety of separate accounts, similar to mutual funds. In other words, a private placement insurance policy allows the contract owner to enjoy a wide range of customized tax free investment options together with attractive pricing. Mass produced policies often have to sacrifice customization options in return for attractive pricing. But this does not apply to private placement policies. In order for Private Placement policies to allow personalized options while still retaining its attractive pricing, a high level of investment is required, hence the need to be an accredited investor.
Here are some of the advantages of investing within a PPLI:
1. Tax deferred returns
2.Non-recognition of capital gains. The ability to switch investment options within the product without triggering taxation.
3.Option of tax-free access to policy cash values.
4.Income tax-free death benefits.
5.Estate tax-free benefits.
6.Privacy with the investment.
7.Total asset protection with PPLI.
Your Tax Bracket
When considering tax free investment options, you are actually comparing the yield with other taxable investment instruments. For instance, an investment vehicle may offer a 10% yield after tax. So if you opt for a tax free vehicle, will the yield be more than 10%? If you expect the returns to be more than 10% from a tax-exempt investment instrument, then it makes sense to invest in tax free instruments. Otherwise, you are better off placing your investments in other taxable instruments with better yields. Obviously, this depends on state and local tax rates, as well as your tax bracket. These factors will affect your after tax yield. To obtain more precise figures, speak with a qualified tax advisor.
Maximizing Your Tax Free Yield
Investments are all about maximizing yields. This is no different when you are considering Private Placement Programs. As we mentioned earlier, these programs are exclusive to high net worth individuals only. But in return for the high level of investments, these highly specialized programs also allow you to build a personalized tax free portfolio.
Now everybody knows, Riccione is the Capital of the Riviera Romagnola. In this period, mostly because of New Years? Eve, but also thanks to the Tax Free shopping, the unceasing foreign tourists who every day crowd the extremely famous viale Ceccarini looking for quality goods at low prices. In the Green Pearl, as Riccione is called, according to the official data released in these days from Global Refund, a first level enterprise which develops Tax Free shopping worldwide (it's basically a service provided to every tourist that demand for it, a inclusive refund of the VAT on every good and product bought in the Riviera and exported to the original country in the personal luggage).
Just Riccione turns out to be the city more positive regarding to this kind of commercialization, with more of 40% of the whole Romagna Tax Free shopping. Here it is the partial ranking: Riccione 45% followed by Rimini with 28%. It's obviously a type of market which is expanding fast on the whole regional territory. This market can boast a continuous increase of almost 20% from 2007, with a medium total expense of 560 euro.
Confronting data of January and October 2008 with data on last year same months, they both show a great increase in the purchase tendency, more precisely January registered a 15% increase, and October a 17% increase.
In the same period, the most evident increase is registered at Milano Marittima instead, where selling increased of 45%, with a medium expense higher than 1200 euro (that's the record of the whole region). Analyzing and profiling customers, (in this case tourists from worldwide), data shows up that Russian people usually stay at the Rimini fiera Hotel, they rank first between all other nation in using TAX FREE with 80% of the total, registering another increase from 2007 of 30%.
At the second place we find tourists from the various nations created after the collapsing of URSS which represent about 6% of the total. At third place there are Arab citizens which in this last year undergo a 40% decrease of purchasing and now they represent just 1% of the total market created by TAX FREE in the Riviera Romagnola.
In these terms, according to the different good sectors, foreign travelers buy 8 items on 10 in the clothes and fashion sector, while receipts in the jewelry category reach a medium price of more than 1780 euro and covers 11% of total revenues.
As already said before, in regard to 2007, this year is certainly in evolution (about 23%) on the total purchase in the Riviera, with medium receipts of about 560 euro.
The opposite trend, respect to the economic world situation, should be confirmed also in the Christmas period, when in one month thousands of Italian and foreign tourists will come to the Riviera for the New Years? Eve in Rimini e Riccione: ready to have fun, ready to spend.
Both Gen Wright & Michele De Capitani are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.