Attention!
For those interested in long-term investments, I now wholeheartedly recommend Bitcoin as the primary option to consider.
However, it’s essential to educate yourself about this digital asset before diving in, as it can take time to fully grasp its intricacies and potential.
A fantastic starting point is the book “The Bitcoin Standard” (Amazon), which provides an in-depth look at the history, principles, and technology behind Bitcoin.
Once you’re ready to invest, most major exchanges offer similar fees and services, so choose one that best suits your needs. Personally, I use Crypto.com.
It’s crucial to transfer your Bitcoin to a secure wallet once you’ve made your purchase, as leaving it on an exchange can pose risks.
To truly make the most of your investment in Bitcoin, take the time to study and understand its workings. Your financial journey will benefit from a well-informed approach.
I wish you the best in your endeavors.
Sincerely
Michael J. Peterson
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A lot of the big players in the robo advisor niche offer tax-loss harvesting.
In this article I will discuss how tax loss harvesting works, the benefits of automation and which robo advisors I recommend for tax-loss harvesting.
What is Tax Loss Harvesting?
What exactly tax-loss harvesting is and learning the rules of taxation can help you put the strategy into practice successfully, but if you don’t feel like understanding or bothering, you can jump right to the results to see which robo advisor is the best for tax loss harvesting.
The simply version:
You get rid off securities that are at a loss and replace them with similar securities. That way you can offset gains on other investments and create tax savings.
The complicated version:
When you sell a security at a higher price than its purchase price, a capital gain occurs.
When you sell a security at a lower price than its purchase price, a capital loss occurs.
The moment you sell the security, it becomes a taxable event.
Taxes are only paid on net gains. (gains minus losses). That means when your gains are more than your losses, you can use a capital loss to offset a capital gain.
Then, if your losses are more than your gains during the tax year, you can reduce your taxable income by the lesser of $3,000 or your net losses.
However if net losses exceed $3,000, you can carry these losses over intarvestingo future tax years.
It is important to keep in mind that this strategy isn’t appropriate for tax-deferred accounts like IRA or 401(k) as earnings are already grow tax-free in these accounts.
If you are still confused about the whole process, check out our article about tax loss harvesting.
The 3 best robo advisors for tax-loss harvesting
Table could not be displayed.1. Charles Schwab Intelligent Portfolios
Table could not be displayed.2. Betterment
Table could not be displayed.3. Wealthfront
Table could not be displayed.Summary
Understanding the tax consequences of selling securities is essential for successful investing. The process can be quite complicated and not everyone has the time and patience to do this by himself.
A lot of robo advisors can do this for you. It’s algorithm-based which means that the process is a bullet-proof and takes the responsibility off your shoulders.
Betterment is certainly the front-runner here but not the only alternative.
I hope you now have a better idea of which robo to choose, if you still have doubts or need advice on a specific robo advisor please leave a comment below.
Michael is a senior writer at The Robo Investor. He earned his master’s at the Craig Newmark School of Journalism at CUNY, and is currently taking CFP courses at the University of Scranton. He has been an avid finance enthusiast ever since he started investing at the age of 23. Meet the Team