Omnia’s Ivan Hernandez Discusses Tax Savings with U.S. News & World Report

It’s tax season – a time that reminds investors of the importance of having a tax-efficient portfolio. For some, as U.S. News & World Report writes, “this only becomes apparent when Uncle Sam presents them with a steep bill, something many taxpayers may be discovering now after the gains in last year’s torrid stock market. But that’s a bit like bolting the barn door after the horses have escaped.” Instead, the publication encouraged investors to consider tax efficiency every time they invest and provided a few expert tips from advisors on finding the appropriate tax-savings vehicle.

Ivan Hernandez, managing director at Omnia Family Wealth, is among the advisors interviewed in this recent article. His advice? Harvest your losses. “No one likes to lose money,” he explains, “but those losses can offset taxes on gains from other investments.” Tax-loss harvesting requires selling a money-losing investment to reduce capital gains elsewhere. Investors can use losses to reduce up to $3,000 of ordinary income per year. “Use market swings to take advantage of this strategy while remaining invested,” says Hernandez.

U.S. News provides an easy-to-follow example. “Let’s say an investor owns a broad market exchange-traded fund like Vanguard Total Stock Market ETF. If that investment produces a loss, the investor could sell it and buy a similar ETF like the SDPR S&P Trust ETF.”

“You haven’t gotten out of the market, but you’ve locked in a loss and you are still completely participating in whatever may happen in the market,” Hernandez says. “It may go down more; it will return up. But that loss is like this little gem that you can use to offset a future gain to reposition the portfolio.”

Hernandez also recommends carefully considering whether an asset belongs in a taxable brokerage account or in a tax-deferred account. He calls this the “low-hanging fruit” when it comes to optimizing your tax efficiency.

The full U.S. News & World Report article is available here.

Important Disclosures: Omnia Family Wealth, LLC (“Omnia”), a multi-family office, is a registered investment advisor with the SEC. This commentary is provided for informational purposes only. No portion of any statement included herein is to be construed as a solicitation to the rendering of personalized investment advice through this communication. Consult with an accountant or attorney regarding individual tax or legal advice.