Don't you just love it when the portfolio you pain stakingly put together makes a profit, earning you a good return? As you stand with your summary report in your hand you can't help but smile and start to imagine what good you could put your profits to!

But then realisation dawns - you have investing expenses to pay - and it's going to hurt!

Just as much as we love our profit summary, so to does the tax man - and he's rubbing his hands with glee at more "free" money - YOUR MONEY! A recent survey from the Vanguard Group assessed that most investors end up forfeiting close to 2.5% of the annual return to the IRS.

But maybe there's ways we can reduce how much he gets - whilst making sure we still get a profit?

For sure.

Here are the top 5 tips on reducing your investing expenses whilst still making a profit.

Invest for more than a year. The IRS consider anything that is sold within a year of purchase as being a short-term capital gain and it is therefore taxed at the same rate as your earned income is - which could be as high as 38%! But the good news is that if you can invest with the ability to hold onto your portfolio additions for at least 12 months, you reduce the maximum amount of tax that you have to pay to no more than 20% - a potentially whopping 18% saving, $180 saved in every $1000!!

Sell against losses. If you can't hold onto certain stocks for the full 12 months and have to sell, look to offsetting your capital gains against losses. The IRS allows offesting your realized capital gains against losses - so claim back on those shares that didn't go the way you expected. You know the ones, they headed south faster than a penguin after free fish the day after you bought them! In some cases you can claim upto $3,000 as a loss against earned income.

Look to utilising high-yield investments. As yet, the IRS haven't formulated any regulations that offset your dividends and interest income. So pay attention to big income-payers such as tax-free bonds, utilities or real estate investment trusts (REITs) in your IRA.

Where possible, don't make any changes to your managed funds. Managed funds more normally than not have a very high turnover and part of the law sets a distribution of at least 98% of realized capital gains every year. From this, the worst case would be finding yourself paying large capital gains distributions, sadly even when the fund is down in a given year.

Buy top quality investments. Yes, i know, a weird sounding tip but think about it for a minute. Better quality investments means the need for far fewer turnovers. Far fewer turnovers therefore equals less capital gains taxes!! Common sense really and a simple enough equation - The less you actually trade then the less tax liabilities you'll actually incur.

Now, as readers of my other Investing articles will know already - although I am a 'self proclaimed genius' when it comes to investing and my wife and bank manager love me - you must always, always seek professional, trade approved advice from the relevant body! Don't hang your investing choices on advice, however stunningly excellent it is, that you find on the internet, because there is some terribly damaginf advice out here. Instead, if you're in anyway unsure of the best way to plot your investments, arrange to see a professional and look him in the eyes as he talks. You'll soon find one intrested in you BOTH making money and not just himself. Use him!