Categories: Investing Insights, Planning & Taxes

The Importance of Daily Tax-Loss Harvesting

Minimizing taxes has been a regular theme in many of our posts this year. After all, we believe minimizing taxes is one of the three actions you can take to maximize your long-term performance (the other two are properly diversifying your portfolio and minimizing fees — other areas at which we excel). Harvesting losses offers the biggest opportunity to minimize your taxes (see Minimize Your Taxes for a complete list). As we have often explained, financial advisors to the ultra-wealthy have employed tax-loss harvesting for many decades, but their use of the technique has typically been limited to performing it on a once-a-year basis at year’s end. The frequency with which an advisor can tax-loss harvest is a function of the […]

Categories: Planning & Taxes, Wealthfront News

Introducing a New Level of Tax-Loss Harvesting

Today we are proud to announce a significant enhancement to our breakthrough tax-loss harvesting service — the ability to harvest losses on stocks that comprise an index. We call this new service the Wealthfront Tax Optimized US Index Portfolio. A little over one year ago, Wealthfront became the first service to offer daily tax-loss harvesting across asset classes. Since then, Wealthfront has become the largest and fastest growing software-based financial advisor, with over $450 million in assets under management, up over 350% in 2013 alone. With today’s announcement we go one step further by taking advantage of the volatility among stocks that comprise the S&P 500 to look for tax losses at the individual stock level without straying from the index or […]

Categories: Investing Insights, Planning & Taxes

Minimize Your Investment Taxes

Our Chief Investment Officer, Burt Malkiel, famed author of “A Random Walk Down Wall Street”, has spent the past 40 years explaining that investors can’t control the market, so they should focus their efforts on the three investment tactics within their control: Diversify and rebalance your portfolio Minimize fees Minimize taxes Previously, we’ve published strong opinions on the value of diversification and advisor fees. However, too often the industry avoids talking about one of the most important aspects of maximizing your long-term investment results: minimizing taxes. The Four Ways to Minimize Taxes There are four ways that financial advisors can significantly reduce your investment taxes: Index Funds Intelligently rebalance your portfolio with dividends Different asset allocations for taxable & retirement […]

Categories: Investing Insights

What To Do In A Falling Market

The global equity markets have been increasingly turbulent over the past few weeks. After peaking on May 21st, the S&P 500 fell in June by more than 5%, and emerging market equities have declined by over twice that amount. Many of our clients are asking us: “What should I do in a falling market?” There are three rational actions to take in response to a falling market, actions that research shows will serve you well in the long run: Keep investing. Rebalance. Harvest your losses. But investors aren’t solely rational. They’re human: When there is turbulence in the markets, people typically have one of three emotional responses. • You want to sell everything in an attempt to “limit” the loss. […]

Categories: Investing Insights, Planning & Taxes

The Fiscal Cliff: Should You Harvest Gains In 2012?

Tax-wise, 2012 is an unusual year. Most experts are predicting, with an unusual amount of certainty based on the political climate and the state of the deficit, that the long-term capital gains tax rate will increase in 2013, to 20% from 15%. In 2012, Congress added an additional 3.8% capital gains tax as part of Obamacare. Therefore, the total could go to 23.8% from 15%. This means someone selling a long-term capital gain in 2013 would pay an additional 8.8% on those gains compared with someone selling in 2012, unless an unforeseen compromise during the fiscal cliff negotiations averts the increase. There’s a saying among tax accountants that the tax tail shouldn’t wag the dog; the tax consequences of an […]

Categories: Wealthfront News

Burton Malkiel Joins Wealthfront As CIO

We’re honored to announce that famed economist Burton Malkiel, who helped launch the low-cost investing revolution with A Random Walk Down Wall Street, has joined Wealthfront as our Chief Investment Officer. Dr. Malkiel is one of the most important public voices in investment management and a leading light in the index investing movement. He’s an emeritus Princeton University economics professor, a former board member of Vanguard Group, and a former member of the President’s Council of Economic Advisors. As Chief Investment Officer, Burt will help Wealthfront continue to improve our investment services, including the choice of asset classes, the way we allocate among different classes, the choice of securities and the methods by which we evaluate risk and apply those […]

Categories: Planning & Taxes, Wealthfront News

Automated Tax-Loss Harvesting by Wealthfront

Today, Wealthfront adds automated tax-loss harvesting to its suite of investment services, putting a benefit long used by the rich to reduce tax bills and maximize investment returns into the hands of typical Americans. Free tax-loss harvesting is another way Wealthfront is democratizing access to high-quality financial advice. Our research shows that automated tax-loss harvesting would have increased your after-tax returns by an average of more than 1% a year between 2000 and 2011. Over the next 20 years that could add more than $54,000 on a $100,000 portfolio. For more on how tax-loss harvesting works, here’s our video: The Competitive Advantage The wealthy have always had a competitive advantage when it comes to the U.S. tax code: They […]