Tag Archives: tax-loss harvesting

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 published posts on the value of diversification and minimizing 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 Seven Ways to Minimize Taxes There are seven ways Wealthfront can significantly reduce your investment taxes: Using Index Funds Rebalancing your portfolio with dividends Applying different asset allocations for taxable & retirement accounts Tax–loss […]

Categories: Investing Insights

Choosing Asset Classes Is Another Form of Market Timing

Any reader of our blog will know that we are not fans of market timing. As our CIO Burt Malkiel is fond of pointing out, research consistently proves it’s almost impossible to outperform the market by attempting to time it. Burt has won great acclaim since he first wrote about this phenomenon 40 years ago in A Random Walk Down Wall Street. The lessons of 40 years ago are just as appropriate today, which is why the book is still a best seller and soon to be released in its 11th edition. We have written about many ways to time the market on this blog — choosing individual securities, investing in individual real estate properties, timing when to withdraw from […]

Categories: Planning & Taxes

14 Things to Consider for Your Year-End Financial Checklist

The last few weeks of the year are always a mad rush to wrap up loose ends, often in a frantic fashion. In the spirit of the season, we thought it a good time to share a checklist of important items to consider before the calendar year ends, all related to your investments and finances. We also wanted to reiterate some key topics we’ve already discussed, but that are especially important to review by end-of-year. Here are some brief pieces of financial advice on several fronts that could benefit you and yours in multiple ways, and that could ultimately add to your long-term bottom line, not to mention peace of mind. 1. Establish or Tune Up Your Emergency Fund If you […]

Categories: Planning & Taxes

New Research on the Efficacy of Tax-Loss Harvesting

Tax-loss harvesting isn’t something new. It’s actually been around for decades. It’s also one of the few ways you can intelligently lower your investment-related taxes. More than $100 billion has been invested with dedicated firms like Parametric Associates and Aperio, and with high-end private wealth managers like Goldman Sachs and Morgan Stanley — specifically to access their tax-loss harvesting strategies. Unfortunately, until recently, tax-loss harvesting was only available to the ultra-wealthy. That changed two years ago when Wealthfront became the first automated investment service to offer tax-loss harvesting to its clients. Wealthfront now manages almost $1 Billion in accounts enabled with tax-loss harvesting. Tax-Loss Harvesting Helps You Defer Investment Related Taxes Tax-loss harvesting is a method to defer taxes, not […]

Categories: Planning & Taxes, Wealthfront News

Happy Birthday, Tax-Loss Harvesting

Back in October 2012, Wealthfront became the first automated investment service to introduce tax-loss harvesting. While tax-loss harvesting has been around for a long time, it traditionally has only been offered to the ultra-wealthy and it was almost always done just once a year by hand. Wealthfront, of course, offered something different — a service watching your account continuously, every day, looking for opportunities to recognize tax losses while still keeping your portfolio properly diversified. Now two years later, Wealthfront has over $900M in client assets invested in tax-loss harvesting accounts, and in that time we’ve performed over 750,000 free tax-loss harvesting trades for our clients. For no extra charge, Wealthfront provides two different levels of sophisticated tax-loss harvesting for […]

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 […]