I started Silly Money earlier this year to document my journey navigating personal finance and taxes.

While I've written countless articles on numerous strategies to save money on taxes, I thought it would be fun to do something different with this edition.

In this post, I'm going to break down three specific strategies I have personally employed this calendar year to save 6-figures in taxes.

My personal financial situation is relatively vanilla at the moment: I have a full-time job where I earn zero salary. I have a small amount of self-employment income and the majority of my income comes from investments.

But, these 3 strategies were still able to save me over $100,000+ in taxes this year:

I was in a bit of a conundrum when I had dollars to deploy into the market earlier this year.

I generally believe it's impossible to time the market -- and you are better off investing into the stock market as soon as you have liquidity available.

At the same time, I was nervous about investing into what could be all-time market highs.

So I decided to use a direct indexing strategy versus buying an index fund.

Direct indexing is simply buying every single company that comprises the index individually, instead of a single index fund.

The benefit of direct indexing is even if the overall index goes up, lots of individual companies will be at a loss.

These losses can then be "harvested" for taxes to offset gains you may have elsewhere in your portfolio.

When implemented correctly, this generates almost the identical performance as investing in an index fund directly, but with greater tax efficiency.

Some estimates show you can get almost 30%-40% of your investment as a usable tax loss!

Here’s how it has gone for me so far:

While almost every major stock market index has gone up, the direct indexing product I use has been able to generate $100,000+ in losses for me so far this year.

At my marginal tax rates, this translates to more than $55,000+ in tax savings this year alone.

The product I personally use is called Frec -- they are also a Silly Money partner (and I'm a small investor, and you can use this link for a $250 credit.

I personally like keeping 5%-10% of my assets in cash or cash equivalents in case interesting investing opportunities pop up from time to time.

Historically, I would use a high-yield savings account which recently paid anywhere from 3%-5% over the last couple of years.

But the downside of a HYSA is all the income is taxed as ordinary income at the worst possible rates!

For me, as a high taxpayer in NYC, almost 50% of every dollar goes to taxes.

Earlier this year, I started using money market funds instead.

Money market funds are investment products that are designed to be a safe place to hold your cash while earning a yield.

Here's where they get interesting though — there are some special types of money market funds that have special tax benefits:

Since implementing this strategy earlier this year, most of my cash has been kept in either:

based on which was yielding more for my specific tax situation at the time.

This has ended up saving me more than $20,000+ in taxes this year!

I use an automated product that scans the market daily to calculate which money market fund pays me the most net of taxes, specific to my personal tax rates.

I explain more of how this works in my Cash Optimization guide.

I love my Roth IRA.

Even though I pay taxes on the dollars that I contribute to my Roth IRA, I don't need to pay taxes on any growth or when I finally get the money in retirement.

And, I have access to my Roth IRA contributions at any time (even before retirement!)

Inspired by Peter Thiel, I've been trying to see if I can compound a large balance in my Roth IRA.

However, I faced two challenges:

But. that's where the Mega Backdoor Roth loophole came to my rescue!

The Mega Backdoor Roth IRA is a crazy tax loophole that lets you use your 401k plan to contribute up to $70,000 a year to your Roth IRA.

There is no income limit to this approach. The only challenge is you typically need a 401k plan that supports this feature (which most companies sadly do not).

However, if you have any self-employment income at all, you can set up your own Solo 401k plan with this feature!

I'll have ~$50K in self-employment income this year, and I'm contributing almost all of it to my Roth IRA via my Solo 401k.

It's hard to quantify how much this will save me in taxes since it doesn't help upfront... but I hope to compound an 8-figure Roth IRA by the time I retire.

That could (hopefully) be millions of dollars saved over the next few decades.

Reply to this email and let me know what you think of this issue.

Also — we’re soon releasing a comprehensive tax masterclass that summarizes the best of our knowledge in time for tax season.

Stay tuned for the official announcement soon — it will only be available for a limited time!

Full Disclosure: I'm writing this as myself, not as some investment adviser or broker-dealer. Purely educational or my personal thoughts - not investment, legal, tax, or professional advice. While my startup Carry owns an investment adviser and broker dealer, this is not meant to be an advertisement and nothing here represents them. Financial decisions involve risk, including losing money. Taxes are complex. Please do your own research or talk to a licensed pro before acting on anything you read here.