Optimal Finance Daily - Financial Independence and Money Advice 3251: Specific Identification of Shares by The Mad Fientist on How to Boost your Investment Returns
Aug 17, 2025
The Mad Fientist, a financial blogger known for his insights on tax optimization and early retirement, shares invaluable tips on boosting investment returns. He reveals the often-ignored strategy of specific share identification, allowing investors to minimize capital gains taxes effectively. By selectively choosing which shares to sell, listeners can significantly enhance their long-term wealth accumulation. The discussion also touches on the balance between active tax management and a more hands-off approach to investing.
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Cost Basis Determines Tax Outcomes
- Cost basis is the purchase price (adjusted) and determines taxable gain or loss when you sell investments.
- Understanding cost basis is essential to control capital gains tax outcomes.
Accounting Method Choice Affects Taxes
- Brokerages offer multiple accounting methods to calculate cost basis when selling shares, which change tax results.
- Knowing method differences lets you plan sales to create gains or harvest losses strategically.
Three-Year Purchase Example
- The Mad Fientist walks through buying 100 shares each year at $10, $20, and $30 to compare methods.
- This layered purchase example shows how different sale choices produce different tax results.