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Maximizing Wealth with Smart Strategies: Tax-Loss Harvesting & Asset Location 

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.

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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!

Why Asset Location Matters

Another way we add value is through a thoughtful approach to portfolio construction—what we call “asset location preference.” This involves deciding which investments should be held in taxable accounts and which belong in tax-advantaged accounts, like retirement accounts.

For clients with a long time horizon, our goal is to maximize the tax-free growth of retirement accounts while limiting the tax liability of taxable accounts. When possible, we aim to hold equities in retirement accounts and fixed-income securities in taxable accounts.

Of course, not every portfolio will follow this approach. Some may hold both equities and fixed income in taxable and retirement accounts. What’s important is how the portfolio works as a whole.

Our Commitment to Adding Value

Tax-loss harvesting and asset location strategies are just two examples of the thoughtful ways we manage portfolios. These techniques showcase the care and attention we bring to every client relationship, ensuring that your financial plan reflects your goals and values.

At Evensky & Katz/Foldes, we don’t believe in a “set it and forget it” approach. Your portfolio deserves more than that, and so do you.

Let’s Talk About Your Financial Future

Ready to see how a thoughtful, personalized approach can make a difference?

Connect with an Advisor.

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