Aptus Capital Advisors argues taxable investors should think about cash flow as timing and tax control, not just yield. A $1 million portfolio needing $40,000 does not necessarily need a 4% yield, especially when roughly 90% of fund distributions are reinvested anyway.
The Faucet and the Well: Cash Flow With a Lower Tax Bill
Aptus Capital Advisors
Brian Jacobs
Article
5 Pages
Key Takeaways
Yield Is Not Cash: A $1 million portfolio needing $40,000 annually may only need a 4% total return, not a 4% distribution yield.
Distributions Leak Value: Traditional income funds can force taxable payouts each year, with ordinary income rates shown as high as 37% in the illustration.
Deferral Has Value: The well structure taxes only cash actually drawn, often at long term capital gains rates of 15% to 20%.
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