As part of the financial planning process, tax planning plays a significant role.
Different investments have certain tax advantages over others.
The need for these types of investments is predicted on the current tax bracket one is in and the desire to avoid taxes as part of their financial plan. The process of financial planning can be a multistep approach. It involves a diagnosis of an individuals present financial situation, their risk constraints, time frames and levels of sophistication. A formal data gathering of individuals financial position including assets, liabilities, cash flow, tax situations, insurance needs, retirement needs and estate planning needs can be addressed. Once the information is analyzed, a plan can be created to point out areas of concern and make recommendations for changes to better support short and long term financial goals.