Who says this is a “supposedly good year for the markets?”

Some of your investments may have lost money this year. Many of your investments may have gains. If you have the type of account for which you have to pay taxes on some, or all, of your gains every year, then we may have the opportunity to “harvest” the investments with losses for tax purposes. Talk to your personal financial advisor about how you may benefit from this service!

Here is an example. and nbsp;

Let’s say we invested in a mutual fund that is invested in foreign companies. This fund, like many international investments, may be worth less today than it was when we purchased it. Let’s say we bought 1,000 shares for $26 and today the price per share is worth $20. In our example, this is a $6,000 unrealized loss in your portfolio.

Let’s say that in another part of your portfolio you have $10,000 of realized gains. This means, at some time during this year, we’ve sold investments that total $10,000 of profit. In this example, if you’re in the 35% marginal tax bracket, you will have to pay $3,500 in taxes. and nbsp;

Here’s what we do that makes us a unique financial planning firm. and nbsp;Your financial advisor may identify a tax loss opportunity in your portfolio and give you a call. and nbsp;After discussing your tax situation, your financial advisor may sell the international investment, realizing $6,000 of losses and offsetting 60% of your $10,000 gains. and nbsp;In our example, this strategy could potentially save you $2,100 in taxes you otherwise would have paid.

We will be doing tax harvesting over the next few weeks. If your financial advisor calls you (and/or your CPA) in December, please be sure to take the call! and nbsp;Oh, and mention this to your CPA who may not be familiar with tax harvesting. and nbsp;We are happy to discuss the details directly with him or her. As always, give us a ring and/or share our number with anyone who may be interested.

About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.

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