Investment Tax Series: Part V Other Hidden Investment Taxes Inflation, Liquidity, Complexity
When most people think of the taxes associated with investing, their mind immediately jumps to April 15th and capital gains taxes. While government taxes are certainly a real cost, they’re just the beginning. In reality, investing comes with a variety of "hidden taxes". For example: mental, emotional, social … And these can have just as much impact on your wealth and your experience.
At McFee Financial Group, we believe understanding these unseen costs is key to long-term success. In this series, we’ll break down each type of investment tax, how they affect you, and how we work to minimize their burden.
Finally in the Series: the other taxes – Inflation, Liquidity and Complexity.
“Risk comes from not knowing what you’re doing.” – Warren Buffett
Beyond the well-known government, mental, emotional, and social “taxes,” three more silent forces can erode your wealth without you noticing.
1. Inflation Tax 📉
Every year, prices rise—often slowly enough that it feels harmless. But over decades, this invisible force slashes the buying power of your dollars. At just 2.5% annual inflation, $100,000 today buys only about $60,000 worth of goods in 20 years. This is why “safe” money sitting in cash or ultra-conservative investments may actually be losing value in real terms.
US Bureau of Labor Statistics. (2025, August 14). United States Inflation Rate. United States inflation rate. https://tradingeconomics.com/united-states/inflation-cpi
2. Liquidity Tax 💧
Wealth isn’t just about what you own, it’s also about when you can access it. Poor liquidity planning forces investors to sell at bad times, such as during market downturns or before an investment has matured. These forced sales can lock in losses and forfeit future gains. Smart planning ensures you can tap the funds you need without sabotaging long-term growth.
3. Complexity Tax 🧩
The more tangled your portfolio, the higher your odds of missing opportunities or making costly mistakes. Overlapping funds, too many accounts, or unclear strategies can lead to duplication, hidden fees, and tax inefficiency. Simplifying your investments improves clarity, reduces costs, and supports better decision-making.
Top 3 Takeaways:
✅ Inflation silently erodes cash and conservative investments.
✅ Proper liquidity planning prevents forced, costly sales.
✅ Simplicity improves financial results and consistency.
McFee Financial Group helps you preserve purchasing power, maintain flexibility, and cut through unnecessary complexity, so more of your money works for you, not against you.