For most investors, 2013 has been a pretty rewarding year. So as we close in on the last few weeks of 2013, it is clear that many of us will face substantial capital gains in taxable accounts as a result of riding these red-hot markets forward.
For investors that are looking for a useful, timely way to cut their tax bill, donor-advised funds might be just the ticket.
And you might just do some real good in the process!
Donor-advised funds all work in a similar fashion. Donors can make a contribution to the fund and claim an immediate tax deduction for this year. Then, once the contribution is made, you can then suggest a grant recommendation to support various charities, as well as determine the timing of such gifts.
The really appealing part of this is the fact the investment you make today might grow over time and continue to provide additional resources for the charitable organizations of your choice down the road.
Investors may contribute cash, appreciated stock, mutual funds or other valuables in some cases. These donor-advised funds don’t allow specific investment into some of my favorite mutual funds, but they still allow donors to choose a mix of investments based on the time horizon and risk desired. For long-term goals, I would suggest a stock-heavy mix.
Here are three donor-advised funds that make the process simple: