When Markets Give You Lemons: Tax-Loss Harvesting

By:

We’ve all heard the saying, “When life gives you lemons, make lemonade.” That same attitude can serve investors well when managing their non-retirement investment portfolios. Naturally, investors tend to place a lot of their efforts on maximizing returns but often fail to pick up the “low-hanging fruit” that can increase their net returns after taxes. Harvesting losses during periods of market volatility is an easy, and often overlooked, aspect of successful investment management.

The Recipe - How Tax-Loss Harvesting Works

Tax-loss harvesting involves selling investments that currently show a loss on paper relative to the initial purchase price. The proceeds of the sale are then invested in a similar investment. IRS rules require that you not re-purchase the original investment for 31 days if you want to recognize the loss on your tax return. This is known as the “wash-sale rule.”

Here’s an example:

If your $10,000 investment declines in value to $8,000, you can sell that investment for a $2,000 loss and invest the proceeds in a similar, but not substantially identical, investment. The realized loss of $2,000 can be used to offset any capital gains you have from other investment sales. If you have no capital gains, the loss can be used to offset ordinary income (up to a maximum of $3,000 per year).

The strategy is most effective during volatile markets and thus should be exercised throughout the year, not just at year-end. 

Other Key Points:

  • There is no limit on the amount of capital gains you can offset. If you had gains of $30,000 during the tax year, offsetting those gains with $30,000 of losses would save you $7,140 (assuming a capital gains tax rate of 23.8%). Your investment portfolio would remain fully invested, but your tax bill would be lower. These tax savings won’t show up on your statement’s performance numbers, but they will fatten your checking account.
  • Harvested losses greater than $3,000, and not offset by gains, can be accumulated, and used in future years, as they never expire. Accumulated losses provide flexibility to tax-efficiently reposition your portfolio during periods when your investments have considerable unrealized gains.
  • Combining tax-loss harvesting with rebalancing (repositioning your portfolio’s allocation back to the long-term targets) is a powerful way to take advantage of market volatility.

How To Take Action

Without question, the most important part of reaping the benefits of tax loss harvesting is to do it! Over several years, this process can often save tens of thousands of dollars in tax savings for larger portfolios. Sadly, tax-loss harvesting can end up being a “rearview mirror” conversation when opportunities are missed. That’s why we’ve made it a key part of our process when managing client assets. If this is something that an investor wants to tackle on their own, here are the main things you’ll need to be prepared to do:

  • Monitor your non-retirement investment account continually and look for meaningful losses to harvest.
  • Be prepared with a researched investment that fits your long-term strategy.
  • Pull the trigger – you must make the trade!
  • Keep track of the 31-day wash sale rule if you want to repurchase the investment that was replaced.
  • Be prepared to do it again in the future!


Investing, as we know, is a journey and there will be moments of highs and lows along the way. That’s part of the process of long-term successful investing. What investors do or don’t do in those moments of highs and lows often has the biggest impact on their ultimate destination. Like a refreshing glass of ice-cold lemonade on a hot summer’s day, monitoring and executing tax loss harvesting strategies is one way investors can turn a negative into a positive when their investment portfolios face more difficult times.

 

Compliance Notes: Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Picture of Steve Hoffman CFA®
Get Started Today

Ready to experience the NPAG difference? Schedule a complimentary meeting today to see if we’re a good fit.

Taylor Ewer

Staff Accountant

Taylor is a Staff Accountant at North Point Advisor Group. She holds a BBA in Accounting from the University of Minnesota – Crookston and has 10+ years of experience in the accounting world. Experience ranging from Accounts Payable and Receivable, Bookkeeping, Payroll, Fixed Assets and Inventory Management. 

Outside of her professional role, Taylor is married with two daughters. In their spare time they like to go outdoors and spend time with family. They enjoy hiking, occasional camping, hunting/fishing and 4-wheeling.

Taylor's Walk-Up Song

Michayla Thielen

Administrative coordinator

Michayla is an Administrative Coordinator at North Point Advisor Group. She holds a BBA in Finance from the University of Wisconsin-Eau Claire, and has previous experience with trading and operations in the wealth management industry.

Outside of her professional role, Michayla enjoys dancing, baking, traveling, and exploring the outdoors. 

Michayla hopes to use her diverse experience and attention to detail to ensure that our clients receive exceptional service.

Michayla Walk-Up Song

Paul Woita

CLU®
Senior Advisor

Paul works to both help our clients and team member’s meet their personal and professional goals.

Paul began his career in the financial services industry in 1979 after graduating from UW-Stevens Point with a degree in economics. His passion for education has continued throughout his career, most recently receiving the CLU® (Chartered Life Underwriter) designation, which further facilitates his dedication to life insurance and estate planning specialization. Paul has been married for over 40 years and has two daughters, and two grandchildren who he enjoys spending his free time with.

Paul’s Walk-Up Song

David Hopkins

CFP®, AIF®, RICP®, CEPA®
Chief Business Development Officer, Partner

David is both our firm’s Chief Business Development Officer and a Senior Advisor. David is passionate about growing our firm by working with clients throughout important stages in their lives. From college planning, to building a family, to retirement and everything in between, David services clients to work towards their goals.

David received his bachelor’s degree from the University of Wisconsin-Eau Claire. He also studied at The American College, where David earned his RICP® designation and completed his CFP® coursework. David is married and has two children. In his free time, David is a competitive golfer who enjoys the outdoors and a wide variety of sports.

David’s Walk-Up Song

Steven Hoffman

CFA®
Chief Investment Officer

Steve has over 30 years of experience managing money for financial institutions, non-profit organizations, retirement plans and individuals, and has earned the Chartered Financial Analyst (CFA) designation. The market’s unique blend of statistical and psychological influences sparked Steve’s passion from an early age. He combines this experience and passion with a heavy dose of integrity and listening to provide impactful experiences for clients.

Steve is most at home in nature, whether that is hiking, kayaking, boating, skiing, motorcycling or music festivals. Steve has two sons in their early 20’s and recently published a spirituality/self-help book entitled Clear Vessels-Live a Clear, Joyful and Guided Life.  

Steven Hoffman is solely an investment advisor  representative of Great Valley Advisor Group, and is not affiliated with LPL Financial.  Any opinions or views expressed by Steven Hoffman are his own and are not those of LPL Financial.



Steven's Walk-Up Song
Steve said he needs two songs because it is going to be a long walk!

Amanda Bryant

Director of Operations

Amanda Bryant is the Director of Operations at North Point Advisor Group. Amanda joined our team in 2016. She works closely with our advisors and staff professionals in a partnership to maintain a strong culture of compliance to regulatory policies. With a focus on internal organizational systems, Amanda enjoys the opportunity to make it possible for the advisors to spend less time on back-office tasks and more time with clients.

Amanda lives in Forest Lake with her son and husband where they spend the summers outdoors hiking, kayaking and swimming and the winters skiing, sledding and sipping hot cocoa.

Focus
• Organizational strategy
• Operational strategy and workflow integration
• Compliance development and implementation

Amanda’s Walk-Up Song

Heidi Steffen

Administrative Manager

Heidi has a BS in Business Management from Cardinal Stritch University. Heidi is also licensed in life and health insurance. Heidi Steffen is the Administrative Manager and joined our team in 2021. She works closely with the Client Services team ensuring the North Point Advisor Group client services standard of excellence is met. As a member of the Operations team, Heidi works to assist in maintaining a strong culture of compliance, implementing company policies and procedures, and elevating company culture and morale

Heidi is married to her husband, Luke. In her free time, she enjoys spoiling her nieces and nephews, bow hunting and yoga.

Heidi's Walk-Up Song

Steve Sadecki

Accountant

Steve holds a bachelor’s degree in accounting from Mankato State University. Steve’s experiences entail over 20 years’ experience handling accounting duties which include daily bookkeeping, payroll, benefits tracking, government filings, and preparation of financial statements.

Steve enjoys spending time fishing, hiking, golfing, and other outdoor activities in his free time.

Steve Sadecki and their Tax/accounting/CPA related services offered through North Point Accounting & Tax, DBA North Point Advisor Group. Steve Sadecki and North Point Accounting & Tax, a separate legal entity, are not affiliated with LPL Financial. Any opinions or views expressed by Steve Sadecki are his own and are not those of LPL Financial.

Steve's Walk-Up Song

Kennedy Johannsen

Accounting Paraplanner

Kennedy Johannsen started with us as an Accounting Paraplanner. Kennedy comes to us from WNB Financial as a Banking Specialist where duties ranged from maintaining relationships with key vendors, developing, implementing and monitoring electronic systems policies and procedures to processing ACH, wires and incoming and outgoing items. Kennedy has a Mathematics degree with a Minor in Psychology and has a love of excel spreadsheets!

As an Eau Claire native, she loves spending time outdoors with her dog Tater Tot, baking, doing crafts/DIY projects and has recently started growing her plant collection!

Kennedy’s Walk-Up Song

Jeffrey Kolodjski

AIF®
Senior Advisor

As a Senior Advisor, Jeff works with a specific emphasis in the areas of retirement income planning, wealth transfer, and overall client portfolio management. He also helps with group benefits, including group insurance planning and qualified deferred compensation plans.

Jeff holds a Bachelor of Science Degree from Iowa State University and FINRA securities registrations through LPL Financial that include the Series 6, 7, and 63. In Jeff’s free time, he enjoys boating, biking, snowshoeing and neighborhood bonfires with friends and family. Jeff is married and is active in his local community.

Jeff’s Walk-Up Song

Matt Laciskey

CFP®, EA
Associate Advisor

Matt works with our clients to help them pursue their financial goals. Matt has a bachelor’s degree in financial planning and financial markets.

In his free time, Matt enjoys spending time with family and watching baseball, hockey, and football. Matt also enjoys tasting craft beers from local breweries.

Matt Laciskey is solely an investment advisor  representative of Great Valley Advisor Group, and is not affiliated with LPL Financial.  Any opinions or views expressed by Matt Laciskey are his own and are not those of LPL Financial.

Matt’s Walk-Up Song

David Guild

EA
Associate Advisor

David comes to us from Concord USA in the Corporate Finance Division. His duties ranged from tracking client projects and consultant data while ensuring accuracy, processing client invoicing and vendor payments to reviewing and processing documents, invoices and payments related to employee expenses. Before Concord, David was with Washington County and 3M as a Financial Analyst. With a Degree in Business Administration with a Finance Emphasis – David’s true passion lies in personal finance.

David is an avid outdoorsman who enjoys experiencing nature in any form possible. His favorites include fly fishing, camping, backcountry hiking, and recreational sports. As a former volunteer firefighter, David brings a strong desire to utilize his knowledge and skills to help others.

David’s Walk-Up Song

Joel Spitzer

Client Services Associate

Prior to North Point, Joel worked for five years in banking as a Teller/Universal Banker. While in school he also worked at Starbucks and interned as a Judicial Assistant for Eau Claire County. Joel recently graduated from University of Wisconsin Eau Claire with a degree in Finance and Political Science.

In his free time, Joel loves being outside and spending time with my friends. He enjoys hiking and is a “want-to-be runner.” He and his friends love trying new restaurants or recipes together.

Joel’s Walk-Up Song

Abbey Glass

Paraplanner

Abbey is a Paraplanner at North Point Advisor Group. She has over 7 years of experience in the financial industry serving in a client services capacity, coordinating with both Advisors and clients to provide outstanding service and care. Abbey is licensed in both life and health insurance.

Outside of work, Abbey has a very active family with two boys who participate in year-round sports. She also loves to spend time traveling, being on the water, and finding new trails to take her puppy on.

Abbey hopes to use her experience and astute attention to client service to ensure our clients are always at the forefront of exceptional experiences.

Abbey’s Walk-Up Song

Mathias Beck

Paraplanner

Mathias has a BS in finance from the Carlson School of Management (UMN-Twin Cities). Before switching to finance, Mathias studied mechanical engineering and worked in the PCL Lab as an undergrad research assistant.

In his free time, Mathias enjoys golfing, lifting, and fishing. He is also an avid fan of basketball and coaches a youth team within his hometown district. On the weekends you may find him at a basketball tournament or up north enjoying the great outdoors.

Mathias’s Walk-Up Song

Matthew Olson

Senior Advisor

Matt comes to North Point after serving and guiding clients in making sound financial decisions over the last 19 years.  By educating and simplifying the complex world of financial planning, Matt aims to bring a sense of security and comfort to his clients, while helping them to look to the future with hope and optimism.  Matt holds his Certified Financial Planner ®, Chartered Financial Consultant ®, and Retirement Income Certified Professional ® designations.  He graduated from St. Olaf College in Northfield, MN while majoring in Economics.

Matt is married and has two children and a high energy Australian Shepherd.   He enjoys watching his kids do what they love and in his free time spends time outside mountain biking and enjoying all that Northern Wisconsin has to offer.

Matt’s Walk-Up Song

Sheri Sorensen

Associate Advisor

Sheri is an experienced Financial Advisor and enjoys bringing peace of mind to businesses and families through sound financial guidance focused on client goals and values. Sheri received her Bachelor of Science degree in Business from the University of WI-Stout and an Associate of Applied Science from Chippewa Valley Technical College. She also studied at the American College where Sheri earned her RICP® designation. Sheri holds her Series 6, 7, 63 & 66, life, accident, and health insurance licenses.

She is married and has 3 children. She lives on a family-owned beef farm and to re-charge, likes spending time in the outdoors, traveling, visiting national parks, hiking, spending time on a lake or beach and scrapbooking.

I believe the secret to a fulfilling life is to be grateful for all that you have and do something every day that makes you happy.

Sheri’s Walk-Up Song

Jason Kell

AIF®
Retirement Plans Director

Jason serves as Director of Retirement Plans for GVA Retirement Consultants and partners with corporate and non-profit executives to improve and manage all facets of their retirement plans. He has provided independent advice and fiduciary guidance to corporate and non-profit employers since 2004. His entire 23-year career has been exclusively focused on qualified and non-qualified retirement plans. 

He assists plan sponsors in fulfilling their fiduciary duties and improving retirement plan outcomes through a focus on liability control, plan committee and employee education, cost reduction, vendor management, and improvement of plan-related operations.

As an Accredited Investment Fiduciary®, he possesses an extensive knowledge of the investment monitoring and management process. He is committed to being a lifelong student of the industry and pursuing positive outcomes through rigorous monitoring and service delivery to his clients.

Jason received his B.A. from the University of Delaware and enjoys coaching youth sports and spending time with his family.

Jason's Walk-Up Song

Mike Dolezal

CFP®, CEPA®
Chief Executive officer, Partner

As both our CEO and a Senior Advisor, Mike leads the team toward our long-term vision and works with a client base of business owners and high net worth individuals.

Mike has a BS in marketing from the University of Iowa and is a CFP® professional as well as Certified Exit Planning Advisor. Mike has his Series 6, 7, 63, and 24 licenses. In his free time, he enjoys hunting, fishing, golfing, and spending time at his family’s cabin. Mike is married with three daughters and is a proud board member for the Mahtomedi Area Education Foundation.

Mike’s Walk-Up Song