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Investment Accounts: More Than Just a Return

By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

While it’s true that we all invest to earn a return on our money, sometimes our investment accounts can accomplish more.

A few years ago, I met with a new client couple who had begun a relationship with another advisor a few months prior.  Reviewing their statements, I saw that when the advisor moved their money to his investment model, the sale of their holdings generated $62,000 of short-term capital gains.  I asked if they were aware of this and what the plan was.  They were shocked to learn they’d be taxed on the $62,000 at their ordinary income tax rates, as there had not been any discussion prior to the investment transactions that generated this realized capital gain.  We had 8 months left in the year, so we opened a tax-harvesting account and through active management were able to utilize volatility in the market to mitigate all of their previously realized gains as well as generate a positive return on the account!  We kept that account open for a few  more years and through active management, realized the capital gains generated in that account in 2020 when their income changed and lowered their long-term capital gains tax rate to zero.

I have another gentleman who plans to sell his business in a couple of years.  We are working with his CPA to determine the anticipated capital gains impact.  We plan to set up a similar account for the purposes of generating a return as well as tax harvesting to potentially offset some gains from the sale of the business.  A similar investment  account has been set up for a couple who plans to sell long-time held rental real estate with the goal of lowering the capital gains tax impact.  Each of these circumstances is a good example of how investment accounts can accomplish more than just a rate of return.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.