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I believe the discussion is about what Wealthfront is doing to earn their 0.25% fee. "Tax loss harvesting" seems unpersuasive.
by jldugger 5y ago
I believe the discussion is about what Wealthfront is doing to earn their 0.25% fee. "Tax loss harvesting" seems unpersuasive.
- erik_seaberg 5y agoAt $100k AUM they start “direct indexing,” buying shares as well as ETFs. I only started in 2020 but so far they’ve harvested 3.6x their own fees. I would not have spent time doing that, so it’s gravy.
- mrep 5y agoExcept you are still going to pay those taxes when you do sell, you are just delaying the taxable event so I wouldn't consider that money actually saved. What is the situation where that is actually useful? Take me for example, I invested for 5 years in VTI and then sold it for a downpayment. What would their TLH do for me in that situation because I didn't need to offset cap gains in those middle years and the end year both get hit with cap gains. Doesn't seem to do anything except charge a higher fee and create more irs paperwork in that situation.
- Scoundreller 5y agoIf we’re talking about the first $3k of losses applied to income account instead of capital account, it is saving you taxes by turning capital losses into income losses where the tax benefits are greater.
- erik_seaberg 5y agoTrue, if you cash out that soon you only get use of the tax money for a little while. I like TLH for the same reason I like a traditional 401(k). Right now I’m getting a Bay Area tech salary and RSUs, and I want to defer some taxes until I’m in a lower bracket.