Make tax-loss harvesting part of your year-round tax and investing strategies
The best way to maximize the value of tax-loss harvesting is to incorporate it into your year-round tax planning and investing strategy.
In managing the asset allocation for your taxable portfolio, don't use big pieces like a large cap fund of funds. Instead, use more individual investments pieces that can help you create tax efficiency. For example, invest in individual large cap value, core and growth funds. This allows you the opportunity to tax loss harvest as individual securities and styles go in and out of favor.
Tax-loss harvesting and portfolio rebalancing are also a natural fit. In addition to keeping your portfolio aligned with your goals, a periodic rebalancing provides an opportunity to reexamine lagging investments that could be candidates for tax-loss harvesting.
In next blogpost, we will discuss which cost basis to choose.