Give More, Pay Less

Making money doesn’t create success; what you do with it does.

The Go-Giver sold millions of copies based on the application of this premise.

The book answered the eternal money question – How do we delineate true wealth?

Your true wealth is determined by how much more you give in value than you take in payment. 

By that definition, making oneself rich should be interpreted by applying this concept.

Kicking off with low-hanging fruit is the best protocol in your chosen pursuits.

Giving highly appreciated stock to your favorite charities checks all the boxes.

For the uninitiated, many investors embrace donating cash when practicing philanthropy. Though well-meaning, they could receive more bang for their buck if they switched to highly appreciated stock instead.

They will receive a charitable deduction if their contributions exceed certain thresholds and eliminate up to a 23.8% federal tax on appreciated securities. This break also applies to individual state taxes.

Why do so many people donate cash to charity and sell stock (paying capital gains taxes) to fund expenditures?

The only logical explanation is they’re not aware this option exists. Americans are charitable, and finding the best giving strategy benefits all stakeholders.

Here are five reasons why donating appreciated stock to charity is recommended:

  1. Increased Tax Benefits: Donating appreciated stock to a qualified charity allows a tax deduction for the total market value at the time of donation. This strategy eliminates capital gains taxes and possibly saves you more on taxes than if you sold the stock and donated the cash.
  2. More Charitable Impact: The charity can sell the stock without paying capital gains taxes. This can provide a more significant gift than just donating cash.
  3. Diversification: If your portfolio has become overweight with appreciated stock, donating some to a qualified charity is an excellent rebalancing technique for eliminating market risk.
  4. Easy to Give: Donating stock is a straightforward process. Most of the time, it can be done electronically through your custodian. This limits ponderous paperwork.
  5. Supporting Causes, You Care About: Donating appreciated stock allows investors to aid their cherished causes and organizations. As an added benefit, you can lower your tax bill and diversify your portfolio. Few can argue with Win-Win strategies.

Fidelity crunched the numbers providing an excellent sample of how this strategy works for high-income individuals. The charity receives more money, and investors slash their tax bills.

It’s important to note that implementing this strategy requires holding the stock for at least one year and donating stock directly to the charity of your choice.

Define your success by how much you give, not how much you take.

The Go-Giver offers a North Star for guidance regarding this philosophy.

All the great fortunes in the world have been created by men and women who had a greater passion for what they were giving- their product service or idea than for what they were getting. Many of those great fortunes have been squandered by others who had a greater passion for what they were getting than what they were giving. 

Creating wealth in the stock market isn’t just about appreciating your portfolio.

Wealth appreciation generates from being grateful for what you have and using your assets to help those less fortunate.





This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.