Tax-loss harvesting is gaining traction as a key offering among top robo-advisors, including Wealthfront and Betterment. This strategy enables investors to optimize their tax situations by selling underperforming securities to counterbalance capital gains, and the publication provides the following information: it can significantly enhance after-tax returns for investors.
Automated Tax-Loss Harvesting
The automated tax-loss harvesting process allows investors to strategically realize losses, which can significantly reduce their overall tax burden. By leveraging this feature, robo-advisors enhance the tax efficiency of their clients' portfolios, making them more attractive compared to traditional investment management services.
Benefits of Robo-Advisory Services
Moreover, the potential tax savings from this strategy often surpass the fees associated with these robo-advisory services. As a result, investors are increasingly drawn to fee-based platforms that not only manage their investments but also actively work to minimize tax liabilities, thereby maximizing net returns.
