4 ms·

I’ve done the math on it and the losses I can declare on and deduct from my taxes from their tax loss harvesting cover their fee. Am I missing something?

• hedora 4y ago
  According to their marketing, tax loss harvesting more than covers their advisory fee for 96% of customers: https://www.wealthfront.com/pricing https://www.wealthfront.com/pricing If you want to save a few more bucks, you could check your portfolio every morning, invest in 100s of stocks manually, track wash sales and comparable stocks, then enter each trade into your tax software instead of just using the 1099 computations their computer does for you. Or, maybe spend that time relaxing or being paid to do something more valuable. They charge $212 a month to manage a million dollar portfolio. Assuming I could earn minimum wage doing something else, the lost wages from the time it would take me to do all that every weekday would be more than $212.
  • geraldwhen 4y ago
    In general I don’t think anyone trades daily. You rebalance quarterly and tax loss harvest annually or maybe semi annually. If you traded daily you would run into tracking error quickly as you ran out of similar funds to jump between for your tax loss harvest.
  • prepend 4y ago
    Or you could look at your vanguard dashboard every year on December 20th, look at the annual losses and sell those reinvesting in something else similar. I think people get $1MM by avoiding $2500/year expenses. I plan on investing for 20-50 more years so saving $50-125k seems like a good exchange for an hour or so work every year. You kind of have to review your holdings manually anyway as even if I had a personal advisor I would still check my own stuff.
• lyrrad 4y ago
  The tax harvesting feature can be worth it for many people. - There can be diminishing returns with higher balances and over time, since one can ordinarily deduct a net of $3000 from income a year and carry forward further losses, so one may at some point be carrying forward losses every year and only deduct $3000 from income. However the fee would continue to grow proportional to the balance. It may make sense to reevaluate whether the service is still worth the fee once one has several years of losses to carry forward. - Depending on how much effort one wants to put in, one may be able to get much of the benefits of tax loss harvesting by doing it oneself. - One may have significant balances in tax advantaged accounts. If those are managed by Wealthfront, one may not be able to get the benefits of tax loss harvesting on those balances.
• prepend 4y ago
  Tax loss harvesting are just realizing those losses earlier. You would have eventually gotten them anyway so if you’re investing in the long term then it doesn’t matter much.
  • itsdrewmiller 4y ago
    Aside from getting money earlier mattering for compounding, this also breaks down if you donate stocks to charity.