Tax Loss Harvesting: Frequency Matters

Executive summary:

  • Many advisors wait until the end of the year to harvest tax losses, but that may not be the best policy.
  • Stock markets frequently go up in the last two months of the year so better harvesting opportunities may be available at other times.
  • When it comes to tax management, every season is tax season.

Many of us start off the new year vowing to shed bad habits and take on better ones. I'm hoping to replace the bowl of chips I have after dinner with a bowl of carrot sticks. Here's something a lot easier to accomplish, for those of us in the financial services industry: rather than scrambling at the end of the year to book tax losses for your clients to use against their capital gains in the future, institute a policy to conduct tax-loss harvesting as a regular feature of your portfolio tax management.

And if you're not doing portfolio tax management as a regular feature of your services to your clients, here's another suggestion. The new year is a great time to start!

At Russell Investments, we know that many advisors consider the last few weeks of the year to be tax-loss harvesting season. We know it is a hallmark of their end-of-year financial planning. But we believe every season can be tax-loss harvesting season. There are many benefits to conducting this key tax-management technique all year long.