One of the best ways to minimize taxes on your investments is to buy stocks. Unlike the typical fund investor, you could pay nothing in taxes. You can't beat that.
Well, you will still pay capital-gains taxes when you sell a stock, but if you hold your stocks for at least a year, you'll pay just the 15% long-term capital-gains rate (if you are in the 25% or higher tax bracket). And by choosing when you sell, you control when you pay the taxes.
To be a tax-free stock investor, avoid the two things that force funds to make taxable distributions to their shareholders: dividend-paying stocks and selling. Shun dividend-paying stocks because the dividends you get are taxed at 15%. And if you don't sell, you won't pay capital-gains taxes.
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