Cutting Taxes Smarter: A Playbook for High-Net-Worth Tech Professionals
True Root Financial is a fee-only financial advisor and financial planner based in San Francisco, CA. We serve clients across the globe.
For high-net-worth tech professionals, taxes are often the single largest expense you’ll ever face. If you hold a concentrated position in your company’s stock, your gains can quietly grow over time, and if you’re not careful, Uncle Sam will take a big portion.
If you are a tech professional interested in learning how we can help you claim your financial independence by investing wisely, minimizing taxes, and maximizing your equity compensation, please book a no-obligation call here.
When your net worth is $5M+, protecting what you’ve built is as important as growing it. Watch the video below to move beyond “basic” investing and adopt strategies built for the ultra-wealthy.
Key Takeaways:
- Tax-loss harvesting can offset gains and reduce your tax bill
- Active strategies can create losses even in rising markets
- Municipal bonds reduce taxable income, especially in high-tax states
- Focus on after-tax returns, not just pretax gains.
At True Root Financial, we start every engagement by building tax-loss harvesting into your investment process. By selling underperforming positions and then reinvesting in nearly identical securities after the 31-day wash-sale period, we capture losses that offset gains elsewhere—often from RSU or option sales.
For example, if you realize $200,000 in RSU gains in a quarter and lock in $50,000 of losses from other positions, your taxable gain drops to $150,000. That can save roughly $12,500–$15,000 in federal taxes alone.
What Challenge Comes with this Approach?
Markets mostly go up over time, so finding enough opportunities to sell at a loss can be tricky. To solve this, we use an active approach that:
- Keeps your portfolio invested for growth
- Captures small losses everyday
We spread your money across hundreds of positions. When one dips below its purchase price, we sell just enough to lock in the loss. Then we reinvest in a very similar security. This keeps your risk and return on track.
Think of it like a gardener pruning a little dead growth daily so the plant stays healthy. Our quantitative models ensure we stay disciplined and don’t stray from your plan. The result: a portfolio that chases gains and harvests losses, improving after-tax performance compared to a traditional buy-and-hold approach.
Client Experience
One client told us that after a year of this approach, his “tax season” went from a frantic scramble to a routine update. He knew in advance exactly how much tax he would owe.
Municipal Bonds for Fixed-Income Allocations
For fixed-income allocations, we guide clients into municipal bonds tailored to their state.
For example, a client with a $5 million portfolio, a 37% federal rate, and 13.3% California tax, shifted 20% of her holdings into high-quality municipal bonds. She reduced her annual taxable income by $40,000 and saved $16,000 in federal taxes.
Why Pretax Returns Aren’t Enough?
Chasing the highest pretax returns isn’t enough. What matters most is how much you keep. By combining:
- Tax-loss harvesting
- Active loss creation
- Strategic municipal-bond allocations
True Root ensures a larger share of your gains stays in your pocket.
Your Next Steps:
Smart tax planning isn’t optional; it’s essential. For high-net-worth tech professionals in California, keeping more of what you earn is as important as earning it in the first place. Book a free consultation below if you are interested to have a detailed discussion:
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