It's Not About How Much You Make, It Is About How Much You Keep
Sara Faitelson • July 27, 2020
It’s not about how much you make, it’s about how much you keep
Last week I had a client call me about his accounts he has for his daughter with me. It was a nice conversation and in the end he always tries to give me stock tips. He tells me about much he is making with certain stocks he is hedging and when he is taking a bath in other stocks he wishes he did not choose. I always tell him the same things: it’s not about how much you make, it’s about how much you keep. What do I mean by that?
If you are trading your investment account and you make a gain, you get a 1099. If you have a loss you can use that loss to offset gains too. Accountants go back and forth with clients about gains and losses on their brokerage accounts during tax season. The client ends up doing so much work and I ask them is it worth it? Can you delegate? The answer is yes, and it can be done with tax harvesting.
There are companies out there that will tax harvest for you. That means at the end of each month they look at the gains and use months that have losses to offset the gains in the account. The 1099 looks very different than what you would be used to, and it presents less headaches for you and your accountant. You can still purchase stocks, bonds, ETFS and you have control of the account. Some companies even have investment freedom in their portfolios. The control is given based on if the account reaches a certain investment amount.
What is the point of this discussion? It might be time to look at your investment accounts vs. using a company that will tax harvest. Your everyday investor has access to the same stocks, bonds and ETFS. Nobody is holding onto the so called “secret sauce” since we live in a global market.
Doesn’t everyone want to keep more? Well the key is: tax harvesting.
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Hello blog readers. I hope everyone is safe and healthy. It has been quite a year. Who would have thought we would still be in a pandemic a year and a half later, but here we are. Lately, we have been laughing about what people are calling Covid 15 – gaining 15lbs during this pandemic. I do not know about you, but I am a big fan of pizza, which is why it is easy to become a victim of Covid 15. Most of us cut the pizza pie into 8 -10 slices. Would you ever buy a whole pizza, cut off one slice, and then throw away the rest of the pizza? I doubt it, but that is what many people do when assessing their financial goals. Last week, my business partner and I were sitting with a couple who is in this situation. They have one piece of their financial business with one person and then other pieces with other people. When I asked how their pension works with their retirement plan, they looked at me like I was speaking a different language. No one has ever looked at this piece of the pie and tried to fit it in the rest of the retirement plan. I asked about reviewing the pension booklet and creating a game plan where they can start planning for their retirement date. They said “oh, that’s how you figure out when to retire.” This is a situation that happens more than I can count. Clients have different people doing different things for them, but no one has an end game. Retirement because reactionary rather than proactively assessed. What is the point of this story? The lesson is: “don’t eat one piece of the pizza and throw the rest of the pie in the trash.” If you want to have success, all pieces of the pie must be analyzed, and they must work together to compliment each other. Registered Representative of, and Securities and Investment Advisory services are offered through Hornor, Townsend & Kent, LLC, (HTK), Registered Investment Advisor, Member FINRA/SIPC. (215) 957-7300. Stiletto Financial and other listed entities are unaffiliated with HTK does not provide legal and tax advice. 7585271RG_Jan28
Hello blog readers. I know it has been a few weeks since I have been able to post. It is tax season and it gets crazy here. This time of the year I am usually on the phone or clients reach out every day non-stop. One week we had a waiting list because we received so many calls in a week. Things are finally calming down and I wanted to write about two types of clients I have. Let me start by saying it is not great to go extremes. I want clients to open their statements and ask questions when we do our quarterly reviews. However, I do not want to receive a call if a client looses 17 cents. Having balance will help you be realistic, and you will not make knee jerk reactions. Balance is the key. It is good for people to want to know how their account is doing, what kind of trends advisors, and the tax consequences associated with their decisions. However, a financial advisor is not focused on day trading. We look at money from a long-term perspective and take the emotion out of investing. What do I mean by that? Have you ever gone food shopping on an empty stomach? It is the biggest mistake I have ever made in my life. I ended up buying way too much food that I could never eat by myself. I was hungry and everything looked appetizing and I started to fill up that shopping cart. We can make the same mistake when it comes to investing in the market: buying investments because everyone tells you to and you are always looking for a good tip. What is the moral of the story? Keep track of your accounts, maintain a balanced view, and don’t go food shopping on an empty stomach when it comes to investing. 3473555RH_MAR23