If your mutual fund strategy emphasizes growth more than income, you’ll want to find ways to ease your tax burden. This way, you’ll save a bundle as you watch your fund increase in value.

Here are some ways to do this:

1. Avoid the temptation of a lump sum distribution.

A lump sum distribution is a payment within a single tax year of the entire amount of the fund. In other words, “cashing out.” When you do this, you’ll have to pay all the taxes that you didn’t pay in earlier years.

If you’re no longer working at the job where you have your tax-deferred account like a 401(k), what should you do?

To avoid a colossal tax bill, do a rollover into another qualified account, such as an IRA. You can also take smaller distributions spread over more than one calendar year. This will lessen your tax burden.

2. Know when to use tax loss harvesting.

If you sell your mutual fund for a higher price than you bought it for, you’ll have a capital gain. If you sell it for less, you’ll have a capital loss. Tax loss harvesting is a strategy that uses capital losses to offset capital gains. When you generate a capital gain, you may incur a capital gain tax. This doesn’t happen if the investment is in a tax-deferred account, such as an IRA or a 401(k).

If there were no capital gains during the year, you can use up to $3,000 to offset your regular income. If net losses exceed $3,000, an investor can carry forward any unused losses into future tax years.

3. Use the strategies of asset location and tax efficiency.

Place funds that generate taxes into tax-deferred accounts, and funds that are more tax efficient into regular brokerage accounts. This is a strategy known as asset location. Managers reinvest capital gains back into the underlying funds of tax-deferred accounts.

A fund is tax efficient if it taxed at a lower rate relative to other funds. These funds generate fewer dividends and/or capital gains and thus, taxes are less. Mutual funds invested in large companies usually produce higher dividends. Bond funds produce income received from the underlying bond holdings.

Therefore, both of these types of funds aren’t tax-efficient.

You also need to be wary of actively-managed funds. These funds generate more capital gains than passively managed funds. A better bet are small-cap stock funds, index funds, or ETFs. You can usually tell if a fund is tax-efficient by looking at its stated goal.

If this goal is growth, it’s most likely a tax-efficient fund that plows its profits back into the business.