Financial Planning Fridays #189: Smart Strategies to Minimize Taxes on Your Investments
Jerry Davidse explains how Presilium approaches tax efficiency for high-net-worth families through a coordinated set of layered strategies applied over time. These include tax loss harvesting, timing capital gains, donating appreciated securities to charity, income shifting through trusts, and retirement moves such as backdoor Roth contributions and Roth conversions.
Jerry Davidse explains how Presilium approaches tax efficiency for high-net-worth families through a coordinated set of layered strategies applied over time. These include tax loss harvesting, timing capital gains, donating appreciated securities to charity, income shifting through trusts, and retirement moves such as backdoor Roth contributions and Roth conversions.
Key takeaways
- Tax loss harvesting during volatile periods can offset gains elsewhere while keeping a portfolio invested for future growth.
- Being deliberate about when capital gains are realized, including around retirement or a business sale, can reduce the overall tax impact.
- Donating appreciated securities instead of cash can avoid capital gains tax while providing a full deduction, and donor-advised funds allow deductions to be bunched into high-income years.
- Backdoor Roth contributions and Roth conversions, especially in lower-income years, are among the retirement strategies used to manage lifetime taxes.
Hi friends. When we think about building and preserving wealth, one of the most powerful levers we have is not just investment returns, it is tax efficiency. For high net worth families, minimizing taxes is not about one single strategy. It is about layering multiple approaches together in a coordinated way over time. Here is how we think about this at Presilium.
First, we focus on tax loss harvesting. During periods of market volatility, we intentionally realize losses to offset gains elsewhere. This allows us to reduce current tax liability while maintaining market exposure and future growth. Second is capital gains management. We are very deliberate about when gains are realized. In some years, it may make sense to realize gains at lower tax brackets. In others, we defer the taxes. This becomes especially important around retirement, business sales, or years with lower income.
We also look closely at charitable giving strategies. Donating appreciated securities instead of cash allows clients to avoid capital gains taxes while still receiving a full deduction. For those who give regularly, tools like donor-advised funds can allow you to bunch deductions into high-income years while spreading out the actual giving over time.
Another key area is income shifting and family planning. This can include strategies such as gifting assets to family members in lower tax brackets, or using trusts to manage how income is distributed in a tax-efficient way. We can also take advantage of retirement contributions and advanced saving strategies, including backdoor Roth contributions and, where appropriate, Roth conversions, especially in years when income is temporarily lower.
Tax efficiency is not a one-time decision. It is an ongoing process that touches every part of your financial life. Our role is to coordinate all of these moving pieces so that over time, more of what you earn stays working for you and your family. Thank you, and I look forward to talking with you next Friday morning.
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