Building a balanced portfolio that's robust to the modern financial woes is already difficult; by employing these tax-loss harvesting techniques you can protect your client’s portfolios from the tax collector. Taxes are a hindrance that don’t present risk, but without proper tax-loss harvesting they can erode investment returns. Most advisors talk about tax loss just once a year. A continued effort will help mitigate losses and help investors feel more comfortable about making moves. Studies show a hefty tax bill discourages investors from making additional moves, which can put them at long-term risk.
The Biden administration is going to create a new environment for investors as it pertains to taxes. Those new laws could pose risks to existing portfolios. Tax-smart transitions can keep financial security intact. Having tax-efficient accounts and finding ways to incorporate tax-friendly investments like munis or other government bonds can not only diversify a portfolio, but also help in the annual tax bill.
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