Cynthia de Fazio 00:00
Welcome to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti Senior of Empower Wealth and Tax and to our viewers at home. Thank you so much for joining us again this week. You know that Phil is very passionate about making sure that you retire with confidence and clarity, and, most importantly, to have a proper tax strategy. So, thank you for being with us, Phil. How are you today?
Philip Capriotti 00:50
We are wonderful. And what a great topic.
Cynthia de Fazio 00:53
Yes, you know, this is a good one.
Philip Capriotti 00:57
Well, we’ve never really addressed this. And you know, with all of the new technology we’re implementing and with AI, and we said it, we did a show where AI is really going to make us better advisors. So, today we’re going to talk about tax loss harvesting on a regular basis. Okay, very important. So, for many of you folks out there, you’re especially we’re talking specifically High Net Worth folks who have large taxable accounts. We’re always talking about converting your IRA and 401(k) to a Roth, and how important it is to retire tax free, or lease tax efficiently. Well, now we’re implementing technology, and we’ve been doing it for the last couple years. We’ve been doing it with the help of one of the largest asset managers in the world, BlackRock, okay, they manage over $12 trillion okay, but we’ve been doing tax loss harvesting on a regular basis. Now, most financial advisors will do tax loss harvesting, believe it or not, once a year, twice a year at most. They do it quarterly, but they do it manually. And so, the technology that we have implemented, and actually next week are my son, Parker is actually going to be on he’s been working on this technology in our home office with Foundations for quite some time. Okay, this allows us to do tax loss harvesting, and I set it up for our clients every two weeks.
Cynthia de Fazio 02:34
Every two weeks?
Philip Capriotti 02:35
Every two weeks.
Cynthia de Fazio 02:36
That’s fantastic.
Philip Capriotti 02:38
And it’s Automated. Yeah. So, we’re going to talk about all of the benefits and so forth. It is so when you tax loss harvest every two weeks, especially when we have down cycles, what we want to do is we want to sell losses and then offset with gains to free up tax free money for additional investments, or we want to sell losses, and we want to accumulate losses so we can apply that towards Roth conversions and not pay any taxes, additional taxes on the Roth conversions. So, there’s a couple different ways to go about it. Some of our clients want, I feel I want tax free income. We had an individual come in, won’t mention any names, large taxable portfolio, little over 5 million in it. And she said, Can you get me $400,000 and I want it from this portfolio each year, tax free, each year. Okay, each year, tax free. So, I thought- I talked to the powers that be, and I said, You know what? This ought to be a really nice test. So, let’s set it up to where we’re just pulling losses, offsetting it with gains to provide tax free income. So, we were able to, we were able to get over four hundred twenty some thousand dollars in the 8% tax bracket, she paid 8%.
Cynthia de Fazio 04:02
Oh my gosh.
Philip Capriotti 04:04
Loved it. So, my mind starts racing a mile a minute. I’m like, oh my goodness, this stuff works. Yes. So now we’re applying it in every different facet. What I would say to you folks out there, we’re going to dig. We’re going to dig deep into this, not just this show for the next couple of shows, if you are high net worth and your current advisor, I don’t care if it’s Eddie Merrill, the Fisher guy. It doesn’t matter if they are not harvesting your losses on a regular basis. You need to pick up the phone and come in or click the QR code and come in and talk to us. This cutting-edge technology literally can save you 10s of thousands over time, hundreds of thousands of dollars in needless tax expense.
Cynthia de Fazio 04:50
Wow. That is incredible. And I love the fact that you’re setting this up. Phil, literally every two weeks. I mean, I think a lot of people probably don’t even think about. Out tax loss harvesting. So, thank you for taking the bull by the horns and running with it.
Philip Capriotti 05:04
You know, we looked at it. We literally can do it daily. But like I said, you know, like I you know, talking to the powers that be, it’s too much. Okay, we need to take a look at these portfolios and rebalance them, either weekly or, I think, you know, 26 times a year, but we can set it up every 10 days. We can set it up however the client wants. So right now, we’re using different models, and we’re and with great success. So, it’s all about many of these tax portfolios, taxable portfolios, they never get touched because folks and advisors tell them, No, we don’t want to sell that because you have capital gains. And capital gains tax going to put you you’re going to pay 20% in taxes. But when you offset losses with wins, losses and wins, that creates zero taxable income, wow. And it can, and it can provide, literally, with 10s, hundreds of 1000s of dollars, depending on the size of the portfolio. So, we’re going to jump in, and we’re going to talk about it. We’re going to talk about tax savings and optimization, okay? And then we’re going to go through a whole list of criteria. So first, we want to offset capital gains. Realized losses can offset current and future capital gains and reduce your income tax at the end of the year. Now, how many high-net-worth individuals are interested in reducing their income tax this year? All of them. And here’s the issue, the CPA doesn’t know about it? Yes, the financial advisor, they probably don’t know about it, or they heard about it. But when you’re working with a tax advisor who’s also your financial advisor, we not only heard about it, we’re implementing it into the portfolios. So, with that being said, really big game changer we can offset up to, you know that $3,000 per year. That’s one thing at the end of the year. But the fact of the matter is, if we’re paying attention, let’s assume for a moment, I have a client that’s doing Roth conversions. Okay, have a significant IRA, sizable IRA, or 401, k plus, they also have a significant taxable account. And folks, a taxable account, you’ll know when your account is taxable, because normally what happens is at the end of the year, you get a 1099, for the interest and the dividends, not for capital appreciation, but for the interest in the dividends. And normally what your advisor does is reinvest that interest in dividends into buying more stock in that particular company. Okay, okay, okay. So, what we want to do is we want to take that interest in dividends, and we want to make sure, and for most folks, they pay taxes on interest in dividends they never received. Okay. So, what this concept does is we still receive the interest in the dividends, but by tax loss harvesting on a regular basis, we can literally zero it out to a zero-tax expense. Wow, that is phenomenal. Yeah, so it’s really great technology. Now, like I said, we’ve been working on it for the last couple of weeks, a couple of weeks, couple of years, all right, but now we’re implementing it, so it’s a whole lot of fun. You can carry forward tax losses indefinitely, but I like harvesting tax losses against current long-term gains, and that’s what I’m talking about. So basically, it lowers your capital gains, 15, 20% exposure in every way. What we’ve been noticing is, for many folks, depending on what their overall goal is, how do we want to implement it? Do we want to implement it by using these losses and taxable accounts to pay for taxes on Roth conversions? We can do that. The fact of the matter is, you have to identify the losses on a regular basis, and then the parent, depending on what your financial goal is, structure them in the most efficient way based on your retirement income plan.
Cynthia de Fazio 09:11
So, I’m going to stop you right there to our viewers at home. Are you curious about tax loss harvesting? Has anyone talked to you about how it should be implemented every two weeks? Well, if you’re curious and you want to learn more, don’t miss the opportunity. Call in today to 888-818-6557, again, it’s 888-818-6557, we know that you have a lot of questions about strategic tax planning. Phil and his team have the answers for you. You’re being offered a complimentary consultation. The time is now for tax planning this year, specifically, while taxes are still low versus what they could be in the future. Again, more information about tax loss harvesting. Book that consultation, 888-818-6557, or you can click on the QR code at the bottom corner of your screen where that takes you to. Is the landing page, of course, of Empower Wealth and Tax you can schedule your time accordingly. Don’t miss it. Take action today. We’ll be right back momentarily.
Philip Capriotti 10:09
Hello. My name is Philip Capriotti, if you’ve already filed for Social Security and would like us to fast track you straight to a licensed fiduciary to create your tax efficient retirement income plan, we’ll be happy to accommodate you. You know, one of the most important priorities to ensure that you do not become tax poor in retirement is to number one, structure a tax efficient retirement income plan as well as a comprehensive Morningstar report. This will ensure that you understand three major variables. Number one, how much risk are you taking? Number two, how much return Are you receiving? And number three, how much are your internal and external fees to fast track your meeting with one of our licensed and experienced team members, just click on the link below, complete the form attached so we can provide you with an accurate and detailed plan. Let’s start empowering your retirement right now.
Cynthia de Fazio 11:16
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, senior of Empower Wealth and Tax, and we’re talking all about tax loss harvesting not done once a year, but what about every two weeks? That’s what today’s show is all about. Phil, you and I were talking in the commercial break that this is a way to mitigate, if you will. So, talk a little bit about that. Yeah.
Philip Capriotti 11:38
Yeah, so, if you mitigate tax drag on your compounding. All right, your investments are compounding, and at the end of the year, you’re paying the taxes on it. So, let’s assume we mitigate that tax drag. Well, basically, lower taxes equals more money invested, which means more compounded growth. So, when you take a look at the equation. It all works. The problem, and everybody’s known this for decades. The issue is, works time sensitive. Okay? Advisors do not have the time to do tax loss harvesting every two weeks on for all of their taxable clients. Okay? They don’t even offer it. They tell you to talk to the CPA. Well, the CPA has no clue what he understands the concept. But as far as having the tech, technology and actually implementing the strategy, one is in disconnect with the other. Makes sense. I mean, they really are. So, then you put your CPA, your tax firm, with your investment firm, then we come up with this cutting-edge state-of-the-art technology. This is the way of the future, except we’re doing it today.
Cynthia de Fazio 12:53
It’s crystal clear when you explain it that way. This is why people at home need to be calling in and scheduling the consultation. We’re hearing things from you that I’m sure they haven’t heard before,
Philip Capriotti 13:01
yeah, so when we get with respect to portfolio management, so let’s go specific to that, what we want to do is we want to replace exposure, okay, or risk exposure, with the replacement of securities. So we want to swap similar investments. Now you have to be careful the wash rule, you know, buying the same investment within a 30-day period, I won’t really get into that, but basically, all I want to do is boost my clients’ portfolios. Efficiency makes sense. So, we have given an example with many of our IRAs and our Roth IRAs. We’re investing in new technologies. We invest in supercomputers. We invest in many nuclear- I’m just giving you a couple. Sure. Okay, we’re investing in quantum computing. These are all new companies, okay? We’re investing in new forms of energy. Well, in these taxable portfolios, they’re not really doing the tax loss harvesting unless you’re adding new money. They’re not taking the money in their dividends and interest and investing in these new technologies. So, this is another use for the strategy that we’re using with tax loss harvesting. I want to basically boost my client’s overall portfolio’s efficiency without opening them up to taxation at the end of the year. In other words, having to pay taxes on long term capital gains.
Cynthia de Fazio 14:32
Makes perfect sense. And what about just the overall increased tax efficiency of a portfolio by utilizing this?
Philip Capriotti 14:40
Yeah. So basically, a couple different things happen here. Number one, the volatility of the portfolio now becomes greatly decreased. Wow, because as you’re losing in a certain company. Give an example. I don’t mean to call out a company or, you know, there for a while. Now, when Doge was working, there were certain factions, certain individuals didn’t care for Mr. Musk. Personally, I think the guy’s a genius. So, what did they do? Tesla stock, by the way, dropped significantly. I bought a ton of it when it was down below, I think was 282 70, something like that. That’s beside the point. If you’re automatically tax loss harvesting, okay? And it was another company, I think it begins with an A everybody’s got the phone, right? They took a beating, okay? United Healthcare, a beating. Down 45% so just give it. The market’s not down, but certain companies are exactly okay. So, this is where we want to take whether they’re down a small a minute amount or a large amount. I want to execute these tax loss harvesting today. I want it to be done weekly, or every two weeks. I want it because I want to maintain balance, and I also want to maintain new investment dollars into new technologies and new companies. Okay, so this is going to overall boost the client’s portfolio in these taxable accounts.
Cynthia de Fazio 16:16
Most having a lot of fun, I know, and it just is. It builds confidence when people know that they can have peace of mind that their investments are being (indistinct)
Philip Capriotti 16:25
When a client says works with a Fidelity or a Schwab, we work with both of them, we can literally move that portfolio over in kind, without selling a thing. You’re basically getting a new advisor. You’re getting a tax advisor as your financial advisor. You kind of get the benefits of two advisors in one. We’ll say, then we can plug in this software, this technology, and it’s on autopilot, so we don’t have to sell the portfolio, bring it over in kind as it is, and let’s go to work on rebuilding it using these tax loss harvesting strategies and technologies.
Cynthia de Fazio 17:07
It’s fantastic, and really, it’s smoother tax liabilities year over year when you’re implementing this type of strategy. Yeah.
Philip Capriotti 17:14
So, if it’s if it’s increasing the diversification of your portfolio. We can use it in that respect, if it’s providing more tax-free revenue with respect to your retirement dollars, I want to pull more money out of this account, but I don’t want to pay any taxes doing it. Maybe the IRS gets a hold of this. They’re just going to love it, okay, but it’s legal. It’s just doing the heavy lifting. It is saving losses in certain companies that we might be overweight in, and using that money to apply towards Roth conversions. Hmm, okay, there are a number of different ways we can apply it. And I’m I just got to tell you, it was kind of funny. My wife says this to me when you’re retiring. I’m like, Well, honey, I’m already retired. Retirement is so much fun with all this new technology, Cynthia.
Cynthia de Fazio 18:10
It is, right? It is, it is. Well, Phil, you’re amazing. And I know that you have a very special message to the viewers at home, we do have to take our next commercial break, so please spend some time talking about what that is today.
Philip Capriotti 18:22
First of all, next week, my son, Parker, who’s worked at our home office for the last three weeks, he is now, fortunately, has graduated to actually, they have him working on technology specifically, fantastic. He’s going to join us on the next show. Possibly we might even be able to get him on it, on another show before he moves back. Okay, sometime in December, but at any rate, call 888-818-6557, if you have a large IRA and haven’t started Roth conversions, if you have a large taxable portfolio that has not really been adequately tax loss harvested. Give us a call. Let us show you what we can do to improve your performance, diversify your portfolio and significantly reduce your taxes, all in one kind. Sweep, dial, 888-818-6557, or click the QR code go to Empower Wealth and Tax empowertaxbill.com that’s empowertaxbill.com and answer a few questions. Or click the QR code and come on in. Now, if you ask for the fast track, we’ll get you right in. If not, it may take three or four weeks to visit with me,
Cynthia de Fazio 19:42
and the Fast Track is really the QR code, right? It really is. I love that. Well, to our viewers at home, the number to call is 888-818-6557, again, 888-818-6557, today’s show talks all about tax harvesting and using strategies to make sure that your hard earned. In income stretch further. Well, how do you do that with strategic planning? And that’s what Phil’s offering you today. Once again, 888-818-6557, or if you need to get on the facts track, click the QR code at the bottom corner of your screen that takes you right to Empower Wealth and Tax and you can tell them you need to be on the fast track to learn more about tax loss harvesting. We’ll be right back momentarily. I have so much more with Phil on Retire Smart Austin.
Philip Capriotti 20:26
Are you ready to take control of your financial future? At Empower Wealth and Tax, our tactical portfolio management services are designed to adapt to market conditions by optimizing your investments. We create customized investment portfolios that limit market drawdown with the potential to increase your portfolio’s return. With our experience and expertise, we will actively manage your investments, allowing you to enjoy life without the worry of excessive market volatility. Don’t let market uncertainty hold you back. Schedule a free appointment with us today, and let’s take your investment strategy to the next level.
Cynthia de Fazio 21:10
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti Senior of Empower Wealth and Tax. And if you are just tuning in, we’ve been talking about tax loss harvesting and not just doing that once a year or every other year. We’re talking about doing it on an every two-week basis. Today’s show is all about strategic planning for your taxes in retirement. So again, thank you for being with us. Phil. I know people in the audience are thinking, I’ve never heard of some of this information before. It’s eye opening, and it can be so beneficial for so many.
Philip Capriotti 21:45
When they come into our office, there’s a lot of things they never heard of before that they’re going to be introduced to and they’re going to be taught how to run a morning star report, how to work with a team of certified financial planners, how to look at a portfolio Through the Eyes of Morningstar report and make recommendations and observe, make observations and then recommendations based on making a comparison. This is who you’re working with. Maybe you have a cookie cutter portfolio. I don’t want to get into all that. I want to stay today on taxes. But what we want to do Doesn’t everyone want to really improve their after-tax performance 100% right? That’s not even a question, okay, I don’t care what. I don’t care whether you’re whether your party starts with a D and R or an I. We all have one thing in common, after-tax performance, okay? Everybody can agree on that, especially during volatile times or when markets go sideways, we also want to capitalize on market volatility. So, when most people worry, when they see excessive market volatility, I look at it as a buying sign. So, when we do frequent reviews and we catch these short-term downturns and turn it into losses that we can now use later, whether it’s for Roth conversion, buying additional investments, diversifying the portfolio with new opportunities that they’re not currently being invested in, We have a number of different pathways to take. I don’t want to just do it quarterly. I don’t want to do it yearly. I want to do it consistently throughout the year, year after year after year, make the most of the advisory fee that you pay. Okay, good point and so the other thing I like to say is what we want to do, is we really want to rebalance tax efficiency. Attach a tax efficiently realizing losses that creates liquidity when we realize those losses and allows us to rebalance without any capital gains or without any additional income taxes. Wow, taking losses, it doesn’t cost me anything to take the losses. It now provides me with a source of revenue to reinvest into new markets. That’s incredible. And when you think about it, it makes sense, but it hasn’t been talked about because, again, many advisors simply don’t want to do it manually, very time intensive, or and, or they want to tell you to talk to your CPA. Well, CPA can’t help you here. That’s true. Okay, so for you folks with these large taxable accounts, do yourself and your family a favor. Give us a call. Come on in. Stop on by. Let us show you. Come on in and kick the tires. Take us for a test drive. And I mean that. I truly mean that
Cynthia de Fazio 24:49
I think, even from a behavioral and strategic advantage, if you will, it’s amazing. It removes emotion from tax planning. How many times do we react emotionally when there’s anything going on in the world. You can’t help it you. But this allows you to truly neutralize, correct.
Philip Capriotti 25:04
It makes you realize that when the market is selling off, you are now creating a source of new dollars. Okay to come back with better investments, improve portfolio performance and more diversification in your portfolio. How many of you folks, I look at these taxable accounts, and we have a portfolio model called unconstrained, and it’s unconstrained. I don’t normally preach returns, but unconstrained means go ahead, Phil, you and your team can do whatever you want. So, we put a lot of research and a lot of analytics behind it. So, for instance, give you an example. Two or three years ago, during the last administration, mini nuclear was like a four-letter word, okay, nuclear, all you had to do is N nuclear, no, not for us, right? Give me wind. Give me solar, right? Okay, mini nuclear is now going to provide us with a new energy source that’s clean for my green friends. Okay, and it doesn’t have to be serviced, but every 10 to 20 years, wow, it has absolutely zero emissions. Now, how many folks are invested in this mini nuclear technology in their taxable account, very, very little, if not zero. Okay, so for instance, what are these accounts? And I won’t mention any companies we have, companies in our portfolio that are up over 200% since the beginning of the year? Why it’s new technology. Why isn’t it in your taxable portfolio? Great question. Well, because we don’t want to trigger long-term capital gains. Well, how about just harvesting losses more frequently and freeing up that income? So, it makes perfect sense. There are other technologies like quantum computing. Okay, I look at these portfolios, and they’re like, Well, we have an ETF we have a mutual fund. I’m sure it’s somewhere in there. When we run the Morningstar reports, we’re really not seeing it. So, when I run a Morningstar report, I want to see how much overlap that individual has. They may have a basket of 30 different mutual funds or ETFs, but many times, what they have are the same companies in each one of them.
Cynthia de Fazio 27:25
Phil, thank you so much to our viewers at home. Thank you for spending time with us today. On Retire Smart Austin, we have so much to cover when it comes to tax loss harvesting. So please. I know you have questions. Call in 888-818-6557, 888-818-6557, 888-818-6557, or, for the fast track, click on the QR code. We’ll see you back one week from today on Retire Smart Austin. Take care.