When I met David Swensen, he pointed out that one of his biggest advantages in investing money for Yale is that it’s a nonprofit institution and thus exempt from taxes. But what should the rest of us do? First, steer clear of actively managed funds, especially those that trade a lot. As David told me, one benefit of index funds is that they keep trading to a minimum, which means “your tax bill is going to be lower. This is huge. One of the most serious problems in the mutual fund industry, which is full of serious problems, is that almost all mutual fund managers behave as if taxes don’t
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