A nearly constant temptation in the world of money is to over-optimize for taxes, or returns, or safety, or income, or leisure, or political preference, or whatever it is that floats your boat.
It’s a temptation because the idea of optimization seems inherently good, and indeed there are many things you can and should optimize to some extent, as part of a process of improvement inside a bigger project. But often that’s not what we mean when we talk about optimization!
Instead, it seems we think of optimization as some reachable end, some place we can arrive at where things have been past-tense optimized. And when that happens we are invariably making significant tradeoffs, sometimes with more than compensating downsides.
When the optimization of taxes becomes an end rather than a practical tool to be used in service of some greater goal, then what you often get is over-concentrated positions in particular stocks, the desire to engage in overly complex and ineffectual property transactions, and a constant sense of griping over the taxes you must inevitably pay even after all that trouble.
When the optimization of income becomes an end rather than a practical tool to be used in service of some greater goal, then what you get is working too much, too long, and too stressed out at a job you don’t really like.
Maybe you get the picture. There are tradeoffs everywhere, and that’s unavoidable. But we can avoid making bad trades, and that starts with having a clear picture of what ultimately matters (hint: it’s not taxes or your income).
Meaningful Returns 