Roberto, an engineer with a passion for finance, follows financial news, discusses the markets with friends and family, and has even had some successes with his own insights.
Over time, however, he has “collected” too many bank accounts and perhaps too many instruments. He now finds it difficult to monitor his risk level and to understand if he’s in the red or in the black.
Roberto decided to turn to me for an opinion on his overall financial situation. As we worked together, he realized he could cut bank account fees, consolidate multiple investments that seemed different but were actually highly correlated, find returns in markets he wasn’t currently in, and, most importantly, focus on tax savings.
During our meeting, Roberto realized that the gains in his portfolio were due to just two funds. If he were to sell them, he would have to pay a 26% tax on the profits.
Other positions were at or near their purchase value, while four other instruments were significantly in the negative. His total portfolio value was €300,000.
Summary of Proposed Solutions
First, we started with a comprehensive evaluation of his portfolio in terms of costs and correlation among instruments. It became clear that several of his financial instruments, though purchased through different intermediaries, had the same characteristics and target markets.
I then suggested consolidating his positions to get an integrated view of his financial assets, with the added benefit of being able to evaluate future tax offsets between instruments.
After the transfer, we decided to sell his previous inefficient investments, request certification of the capital losses, and reallocate the resulting cash into a managed account that could offset the current losses with future gains.
I guided Roberto through several financial education sessions to make him aware of the importance of planning and of adopting solutions aimed at tax savings.
You can find more details about my planning report, which includes wealth tax optimization, in the “My Approach” section of my website.
Do you see yourself in Roberto’s situation?
How important is it for you to manage the tax aspects of your wealth?
If you want to get a free second opinion, contact me for a no-obligation meeting.