Tax-Loss Harvesting | Offsetting Future Gains

Jonathan M Satovsky discusses how in periods of high volatility, we should ride the wave by leveraging Tax-Loss Harvesting to create tax credits that may otherwise be ignored.

Good afternoon. This is Jonathan Satovsky of Satovsky Asset Management. August of 2019 with a video blog update on how to take advantage of the waves of summer and the increased volatility through a concept called tax loss harvesting.

So, it’s not lost on me that some people like to jump into the waves and some people like to get out when the waves are very high.

And whether it’s the waves in the ocean at the beach or whether it’s the waves of volatility, increased volatility that generally happens in the month of August and financial markets.

I’m going to teach you how to take advantage of those situations today, through this simple example.

We’ll take investor A who has a million dollars invested and sees the investment decline to $900,000 and then rebound to a million dollars.

Experiencing a rollercoaster but not much financial difference.

Investor B on the other hand, has the same million dollars invested and as the $900,000 declines, decides to sell their securities and buy like-kind securities, that basically inures a tax credit. And this tax credit or $100,000 loss that is created, depending on someone’s tax bracket will inure to somewhere between $15,000-$50,000 of credits to be used either this year or in subsequent years to offset future gains, or to directly offset someone’s income taxes.

So, as you ponder this example, I hope you enjoy your Labor Day weekend.

Enjoy the high seasons of high waves and high volatility and realize there’s always opportunity to take advantage of the adventure.

Have a wonderful holiday.