Don't Be a Year-End Tax Planner

Back in the day after the Thanksgiving break, we used to print off an excel spreadsheet for clients with taxable accounts. The objective was to comb through individual positions in to determine if there were capital losses that could be taken between then and December 31.These capital losses could then be used either to offset taxable income or absorb other capital gains

Today, most taxable accounts that we manage have ongoing tax management software embedded within. The steep selloff in March provided an opportunity to take advantage and intentionally create realized losses (example noted below) while simultaneously staying invested.

Let's fast forward to Thanksgiving 2020 and pretend the market stays where it's at today. There certainly aren't any losses to harvest. A significant opportunity was missed. 

The only thing worse than experiencing a 30-40% market selloff is being paralyzed to rebalance into that pain or execute proper tax loss harvesting. Building tax efficient portfolios from the start and actively managing for taxes allows the client to earn a higher net rate of return than they would have otherwise.

Tax planning is an ongoing process, not something meant for the last 30 days of the year. If you have a taxable account, consider being more proactive on this front.

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^{Sources: Koyfin Charts & SEI Private Client Dashboard}

^{The content in this article was prepared by the article’s author. Voya Financial Advisors, Inc. does not endorse its content, and the views expressed may not necessarily reflect those held by Voya Financial Advisors, Inc.}

^{Neither Voya Financial Advisors nor its representatives offer tax or legal advice.  Please consult with your tax and legal advisors regarding your individual situation.}