This article is a website version of our weekly FREE Best Ideas Newsletter sent on 16.07.2024. Sign up here to get it in your inbox every Tuesday.
In this article, I want to remind you of a smart way to lower your biggest investment expense, and taxes and thus increase your returns.
Two weeks ago, I saw that Scandinavian Tobacco Group had fallen over 20%. To make the best of this, I used a strategy called loss harvesting, something I use all the time. I sold the stock, at a loss which gave me a €600 capital gains credit. This credit can offset future profits, reducing my tax liability.
Over the following week, I looked at the company and bought it again, making it a slightly larger position than before.
The sale and purchase cost me max 1% in transaction fees but it gave me a nice tax credit, something I would not have had if I just continued to hold the stock.
Works Great for Stock Options
If you have valuable stock options, this strategy can be even more beneficial. Here's how you can make it work for you:
Identify Stocks with Losses:
Review your portfolio to find stocks that have declined in value, especially those that are down a lot. If you normally invest in index funds you may want to buy the largest stocks in the index individually so that you can buy and sell the individual stocks.
Calculate Potential Tax Benefits:
Use a spreadsheet or tax software to estimate how much selling these losing stocks can reduce your tax burden. I have a calculation to my portfolio spreadsheet that does this automatically.
Sell the Losing Stocks:
Sell the losing stocks. This will realize the losses, which you can then use to offset gains.
Offset Gains from Stock Options:
Apply the realized losses to offset the gains from exercising your stock options. This can significantly reduce the taxes you owe on those gains.
Keep Profitable Stocks:
The beauty of this strategy is that you don’t have to sell your profitable stocks. You keep them and benefit from the losses in your overall portfolio.
Very Important - Consult Your Tax Advisor
Before implementing this strategy, talk to your tax advisor. They can ensure that these actions comply with your country’s tax laws and won’t be disallowed.
Quant Value newsletter update
A good positive week for the newsletter with the following large movements:
- Taylor Morrison Home +14% (up 128.8% since Nov 2022)
- Weyco Group, Inc.+12%
- Maezawa Industries +10% (up 175.0% since Nov 2022)
- Höegh Autoliners A -6% (up 121.5% since May 2023)
Subscribers are still sitting on the following solid gains:
- North America +16%
- Europe +33%
- Asia +25%
- Crash portfolio (2022) +91% (Only 3 companies left 12 sold for an average gain of 26%)
If these ideas sound interesting, you can get more information here: Your Treasure Map to Europe, Asia, and North America's Hidden Gems!
Want to have a look before you subscribe? Simply reply to this email with “Quant Value trial issue” in the email and we will send you a recent issue to review.
Shareholder Yield Letter update
Since May 2023 when we started the 52 ideas have already paid an average dividend of 3.1% and subscribers are sitting on an average return of +12%.
Dividends keep rolling in and have already started to increase substantially as the yearly dividend paying companies start paying. This makes it a great portfolio if you are looking for income ideas.
As things stand today the portfolio has an average historical dividend yield of 4.8% and bought back 4.6% of their stock last year. This gives you an average Shareholder Yield of 9.4%!
If this sounds like the kind of company, you would like to BUY, you can find more information here: Invest big, win bigger with our market beating large-cap strategy!
Want to have a look before you subscribe? Simply reply to this email with “Shareholder Yield trial issue” in the email and we will send you a recent issue to review.
Your analyst, helping you make the most of your losses
PS To find great companies that exactly meet your investment strategy right now click here.
PPS It is so easy to forget, why not sign up now before you get distracted?
