Finding ways to add value to managing client portfolios is vital to maintaining long-term successful relationships. At Evensky & Katz/Foldes, we don’t just invest your money and move on. We’re always looking for opportunities to demonstrate our expertise and assure you that we’re keeping an eye on your portfolio.

Of course, in a perfect world, our assets would only go up in value. But that’s not how the stock market works, and we know there will be down periods. The good news? These downturns often create opportunities to benefit your portfolio, like tax-loss harvesting.

What Is Tax-Loss Harvesting?

Tax-loss harvesting is a strategy we use to analyze your portfolio for investments that have dropped in value. By selling these positions, we lock in a paper loss. To ensure you stay invested in the market, we immediately purchase a similar investment. The IRS requires this “placeholder” fund to be held for at least 31 days before we can repurchase the original asset.

These realized losses can offset gains from other investments, potentially reducing your tax liability for the year.

Managing Tax Liability: A Key Part of Our Process

Speaking of taxes, no one enjoys filing their return—especially if it comes with a surprise bill. Like any unexpected expense, a large tax bill can be frustrating, particularly if you weren’t prepared for it.

This is why communication is so important. We strive to help clients minimize tax liability wherever possible while also ensuring there are no surprises when tax season rolls around. Sometimes, writing a check to the IRS is unavoidable. But remember, a tax bill often means you made money!