For affluent and high net-worth investors it’s really about what they walk away with, not necessarily how much they earn. A high performing investment can become very mediocre once taxes are taken into account.
There are, however, ways of mitigating tax implications from a variety of different types of investments. In the case of hedge funds, for example, a highly effective way to mitigate taxes is to use private placement life insurance (often referred to by it’s initials: PPLI).
PPLI is one of the best-kept secrets in tax planning, part of the appeal of private placement life insurance is that the investment options can be tailored to a high-end client’s needs and the cost of insurance per dollar of coverage is greatly reduced. What’s also very important about private placement life insurance is that it can be especially useful as a component of more complicated tax strategies. All in all, private placement life insurance is income tax efficient, while providing the owner with tax-free access to the policy cash values.