Carl Delfield has some advice for investors on how to lower tax liabilities by converting to exchange traded funds (ETFs). It’s no secret that ETFs are flexible and transparent, so as an investor you can use that to your advantage. An example of a conversion from a mutual fund to an ETF is to sell the mutual fund, invest the proceeds in an ETF that is similar but not identical to the previous investment to avoid a wash, then apply your loss to other capital gains distributions to lower overall tax liabilities.
This tax loss "harvesting" is a good way to balance your overall portfolio. One could also use an ETF to replace a collection of individual stocks that are at a loss and buy a sector ETF. By using these ETF strategies an investor can take a loss without losing exposure and take a tax efficient position with future capital gains distributions reduced.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.