Strategic Tax Planning: Kickstart the Year With Direct Indexing

Executive summary:

  • Initiate the year with direct indexing, encompassing tax planning, personalized investing strategies, rejuvenating sidelined cash, and navigating concentrated stock positions or financial windfalls.
  • Commencing early tax-loss harvesting though direct indexing sets the stage for potentially increased after-tax returns and reduced tax burdens throughout the year.
  • These questions and scenarios enable advisors to unearth potential opportunities within direct indexing.

Over the past year, I’ve been sharing tips and strategies on direct indexing.

January isn’t just about resolutions; it’s a great time to set up financial strategies. Although—when it comes to taxes, many investors aren’t actively managing them year-round. But here’s the scoop: the real game-changer is starting early. Kicking off tax-loss harvesting at the start of the year unlocks nearly 11 months for harvesting potential losses. Why does this matter? Well, it’s about potentially dodging hefty taxable gains from selling securities and opening up more avenues for you to hit your financial targets. Opting for a direct indexing portfolio in January buys you a whole year to balance gains with those harvested losses. Delaying this strategy limits the window for goal achievement—a key factor that often gets overlooked.