Author Topic: Betterment - Tax Loss Harvesting now available to everyone  (Read 2524 times)

MustachioedPistachio

  • 5 O'Clock Shadow
  • *
  • Posts: 98
  • Location: Memphis, TN
Betterment - Tax Loss Harvesting now available to everyone
« on: April 02, 2015, 12:29:53 PM »
Just thought I'd mention that Betterment has enabled their Tax Loss Harvesting algorithm for everyone - no minimum balance needed.

Here's the link below, with the update under "Who is eligible to use TLH+?". I expect them to have a more formal announcement at some point...I thought it was a glitch in my account!

http://support.betterment.com/customer/portal/topics/670337-tax-loss-harvesting


Here's MMM's experiment results http://www.mrmoneymustache.com/betterment-vs-vanguard/ for Betterment vs. Vanguard, and, in an effort to not start another Betterment Brawl... here are a few threads for further reading:

http://forum.mrmoneymustache.com/investor-alley/betterment/
http://forum.mrmoneymustache.com/investor-alley/betterment-or-vangaurd/
http://forum.mrmoneymustache.com/investor-alley/betterment-for-taxable-holdings/
http://forum.mrmoneymustache.com/investor-alley/betterment-$50k-'safety-net'/
http://forum.mrmoneymustache.com/investor-alley/should-i-use-betterment-investments/
« Last Edit: April 02, 2015, 01:09:14 PM by DJstash »

SuperSecretName

  • Bristles
  • ***
  • Posts: 250
Re: Betterment - Tax Loss Harvesting now available to everyone
« Reply #1 on: April 02, 2015, 12:32:54 PM »
link to news/changed policy?

MustachioedPistachio

  • 5 O'Clock Shadow
  • *
  • Posts: 98
  • Location: Memphis, TN
Re: Betterment - Tax Loss Harvesting now available to everyone
« Reply #2 on: April 02, 2015, 12:37:21 PM »
Doh! I've updated the OP to show where I first saw the confirmation. Good catch :)

Doulos

  • Stubble
  • **
  • Posts: 116
  • Age: 41
Re: Betterment - Tax Loss Harvesting now available to everyone
« Reply #3 on: April 02, 2015, 01:54:13 PM »
Which situations would make Betterment + this TLH a good plan vs just a Vanguard account?
- I am currently doing stupid things will my investments and am looking at the options for moving funds.  So this kind of topic is especially interesting to me.

tdogz

  • 5 O'Clock Shadow
  • *
  • Posts: 19
Re: Betterment - Tax Loss Harvesting now available to everyone
« Reply #4 on: April 02, 2015, 02:40:33 PM »
Which situations would make Betterment + this TLH a good plan vs just a Vanguard account?


The FAQs at the link in the original post talk about situations where it is beneficial and when it is not. For example...
Quote from: Betterment.com
There are some specific instances when you should not use TLH+ or must proceed with caution. Tax deferral is undesirable if your future tax bracket will be higher than your current. If you expect to achieve (or return to) substantially higher income in the future, tax loss harvesting may be exactly the wrong strategy—it may, in fact, make sense to harvest gains, not losses.

You should not use TLH+ if you are currently in a 0% tax bracket with respect to capital gains.

MustachioedPistachio

  • 5 O'Clock Shadow
  • *
  • Posts: 98
  • Location: Memphis, TN
Re: Betterment - Tax Loss Harvesting now available to everyone
« Reply #5 on: April 02, 2015, 02:52:52 PM »
Doulos, there's plenty of lively banter on this topic in the threads I posted above.

For Betterment, it boils down to if you want to pay for a fancy UI and have just about everything done for you automatically versus a Vanguard setup that does all of that but without as pretty a UI.

The TLH depends on several things:
  • Do you invest in the same indices elsewhere? Does your legal partner (if married)? If so, you'll encounter wash rules, which basically "undo" the harvest
  • Are you in a low tax bracket (including state, federal)? If so, the additional value of any kind of TLH will be diminished
  • Will you make frequent purchases? This will help create more opportunities for harvests
  • What's your hold period? Longer periods (>1 year) are better for deferred taxes

If you intend on Tax Gain Harvesting, Betterment is not structured to do that type of tax planning...it's a little too automatic.

The MadFientist does excellent write-ups on this kind of stuff...here are some links:
http://www.madfientist.com/tax-loss-harvesting/
http://www.madfientist.com/moving-my-money-to-betterment/
http://www.madfientist.com/tax-gain-harvesting/

If you are "doing stupid things" with your investments, you are in a good place to remedy that behavior!

tj

  • Handlebar Stache
  • *****
  • Posts: 1249
  • Age: 34
  • Location: Maui
    • Arcadia Power
Re: Betterment - Tax Loss Harvesting now available to everyone
« Reply #6 on: April 02, 2015, 04:58:13 PM »
This is a direct response to the Schwab product. Good to keep them on their toes. Now if maybe they'd lower their fees? ;-)