Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

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confusedinvestor
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Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sat Jan 20, 2018 2:57 pm

Hi,
Today, I invest in Schwab Intelligent Portfolio (SIP) [85% Stock, 9% Fixed, 6% Cash] b/c my independent advisor suggested with use SIP for Automated Tax Loss Harvesting which he said is a good value of typical Robo Advisors.

Question: Does anyone have seen any real results with TLH savings from Robo Advisors (Schwab SIP, Betterment, etc) to worth keep Robo in Taxable ?

I have a feeling Robos just use this Auto TLH as a marketing point vs true value of keeping Robo when compared with classic 3 Fund Portfolio. I'm thinking of cancel SIP and move to 3 Fund but issue is 6K STC gain

ps:

1. Please note SIP lagged 3 Fund P by > 1% per Taylor's post below:

viewtopic.php?f=10&t=238585&p=3730224&h ... b#p3730224

2. SIP beat Vanguard PAS Robo for last 2 years per independent Candor Capital reports.

3. Backtesting results of SIP vs Robos vs 3 Fun

viewtopic.php?t=223465

JFP_SF
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by JFP_SF » Sat Jan 20, 2018 4:47 pm

I use SIP, but I had no losses to harvest. Nor did I on the funds I invest myself. It's a tough problem :D

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sat Jan 20, 2018 5:05 pm

Are you happy with SIP and it's under performance vs 3 Fund ?
How do anyone know that SIP actually saved you on Taxes via it's Auto TLH ?
JFP_SF wrote:
Sat Jan 20, 2018 4:47 pm
I use SIP, but I had no losses to harvest. Nor did I on the funds I invest myself. It's a tough problem :D

nasrullah
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by nasrullah » Sat Jan 20, 2018 5:30 pm

My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.

I’m currently moving my accounts to Vanguard. If you get TLH for free fantastic. Don’t use it as part of your criteria to pick where to go/what to do.

Moving forward if rebalancing can generate a TL I’ll do it. Otherwise I wouldn’t lose any sleep over it.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

nasrullah
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by nasrullah » Sat Jan 20, 2018 5:34 pm

confusedinvestor wrote:
Sat Jan 20, 2018 2:57 pm
Hi,
Today, I invest in Schwab Intelligent Portfolio (SIP) [85% Stock, 9% Fixed, 6% Cash] b/c my independent advisor suggested with use SIP for Automated Tax Loss Harvesting which he said is a good value of typical Robo Advisors.

Question: Does anyone have seen any real results with TLH savings from Robo Advisors (Schwab SIP, Betterment, etc) to worth keep Robo in Taxable ?

I have a feeling Robos just use this Auto TLH as a marketing point vs true value of keeping Robo when compared with classic 3 Fund Portfolio. I'm thinking of cancel SIP and move to 3 Fund but issue is 6K STC gain

ps:

1. Please note SIP lagged 3 Fund P by > 1% per Taylor's post below:

viewtopic.php?f=10&t=238585&p=3730224&h ... b#p3730224

2. SIP beat Vanguard PAS Robo for last 2 years per independent Candor Capital reports.

3. Backtesting results of SIP vs Robos vs 3 Fun

viewtopic.php?t=223465
By the way. Would the $3k/year on you taxes be worth the 6% drag on your portfolio by being in cash?
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

jcf
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by jcf » Sat Jan 20, 2018 5:46 pm

nasrullah wrote:
Sat Jan 20, 2018 5:34 pm

By the way. Would the $3k/year on you taxes be worth the 6% drag on your portfolio by being in cash?
Yea, 6% cash sounds a bit too much. In fact, Robo portfolio should not hold cash at all.

JFP_SF
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by JFP_SF » Sat Jan 20, 2018 6:05 pm

confusedinvestor wrote:
Sat Jan 20, 2018 5:05 pm
Are you happy with SIP and it's under performance vs 3 Fund ?
How do anyone know that SIP actually saved you on Taxes via it's Auto TLH ?
Underperformance over what period? I think it's a bit early to tell whether it will underperform long-term, but we will see. Its use of non-cap weighted funds is what I found interesting, and why I decided to put some money in it. In any case, I don't think they are comparable portfolios. See viewtopic.php?t=223465#p3472357 for a comparison of the approaches. You might as well ask if I'm happy with my Total Stock Market fund and it's underperformance against Bitcoin?

I don't see any reason why it's auto TLH won't work; it doesn't require any kind of complicated algorithm. However, it requires losses to harvest

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sat Jan 20, 2018 7:53 pm

Hi Narullah,

Can you advise what did your CPA said about 'reality' of TLH for Robo?
nasrullah wrote:
Sat Jan 20, 2018 5:30 pm
My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.


MotoTrojan
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by MotoTrojan » Sat Jan 20, 2018 9:32 pm

confusedinvestor wrote:
Sat Jan 20, 2018 7:53 pm
Hi Narullah,

Can you advise what did your CPA said about 'reality' of TLH for Robo?
nasrullah wrote:
Sat Jan 20, 2018 5:30 pm
My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.

How big of losses? Can’t think of any negatives other than paperwork for your cpa.

nasrullah
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by nasrullah » Sat Jan 20, 2018 10:39 pm

confusedinvestor wrote:
Sat Jan 20, 2018 7:53 pm
Hi Narullah,

Can you advise what did your CPA said about 'reality' of TLH for Robo?
nasrullah wrote:
Sat Jan 20, 2018 5:30 pm
My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.
I bought into the marketing of by the robos that TLH was this all amazing thing and you were a fool if you missed out. My first year I didn’t read the fine print/know about the $3k per year cap. The second year the real offset on my taxes was minimal.

My point is that TLH is sprinkles on a sundae. If it’s included automatically and for free then go for it. I would not use TLH as a determining factor on where to open an account. My rebalancing bands are going to dictate trading for me moving forward. If I can TLH at the same time fantastic but it won’t be the driving concern.

The lesson I learned from this forum and the recommended books is straightforward: simplicity, costs, tax efficiency and consistency are what you need to focus on. Wealthfront generates 0.25% from you in management fees. Schwab does it by a) holding cash in you account and b) investing in their funds. Both will auto trade and TLH for you which will move you in and out of different expense ratio funds. It took me a while but I realized that it’s better for me to have this money working for me, not paying someone else.

On the simplicity side I’m in the process of moving to Vanguard. My account statement from Wealthfront is almost 30 pages of different holdings. When you look at the accounts online all of this is hidden from you. It’s not until you dig deep before you realize what’s really going on. I’m going to pay PAS initially just to figure out the best plan to unwind all of this.

I spent months reading and learning as much as I could. Every time I thought I had an “ah ha” moment a day or two later I was back scratching my head. I finally realized there is no spoon, and for me the answer really is the three fund.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

JFP_SF
Posts: 76
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by JFP_SF » Sat Jan 20, 2018 10:46 pm

nasrullah wrote:
Sat Jan 20, 2018 10:39 pm
confusedinvestor wrote:
Sat Jan 20, 2018 7:53 pm
Hi Narullah,

Can you advise what did your CPA said about 'reality' of TLH for Robo?
nasrullah wrote:
Sat Jan 20, 2018 5:30 pm
My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.
I bought into the marketing of by the robos that TLH was this all amazing thing and you were a fool if you missed out. My first year I didn’t read the fine print/know about the $3k per year cap. The second year the real offset on my taxes was minimal.

My point is that TLH is sprinkles on a sundae. If it’s included automatically and for free then go for it. I would not use TLH as a determining factor on where to open an account. My rebalancing bands are going to dictate trading for me moving forward. If I can TLH at the same time fantastic but it won’t be the driving concern.
The $3K is net (capital losses - capital gains), so it can be worth more to you, and you can also carry it forward at $3K a year. However, I agree, it's a small additional benefit. If you don't like the robo strategy, it is definitely not worth it.

drk
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Location: Seattle

Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by drk » Sat Jan 20, 2018 11:50 pm

nasrullah wrote:
Sat Jan 20, 2018 10:39 pm
confusedinvestor wrote:
Sat Jan 20, 2018 7:53 pm
Hi Narullah,

Can you advise what did your CPA said about 'reality' of TLH for Robo?
nasrullah wrote:
Sat Jan 20, 2018 5:30 pm
My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.
I bought into the marketing of by the robos that TLH was this all amazing thing and you were a fool if you missed out. My first year I didn’t read the fine print/know about the $3k per year cap. The second year the real offset on my taxes was minimal.

My point is that TLH is sprinkles on a sundae. If it’s included automatically and for free then go for it. I would not use TLH as a determining factor on where to open an account. My rebalancing bands are going to dictate trading for me moving forward. If I can TLH at the same time fantastic but it won’t be the driving concern.

The lesson I learned from this forum and the recommended books is straightforward: simplicity, costs, tax efficiency and consistency are what you need to focus on. Wealthfront generates 0.25% from you in management fees. Schwab does it by a) holding cash in you account and b) investing in their funds. Both will auto trade and TLH for you which will move you in and out of different expense ratio funds. It took me a while but I realized that it’s better for me to have this money working for me, not paying someone else.

On the simplicity side I’m in the process of moving to Vanguard. My account statement from Wealthfront is almost 30 pages of different holdings. When you look at the accounts online all of this is hidden from you. It’s not until you dig deep before you realize what’s really going on. I’m going to pay PAS initially just to figure out the best plan to unwind all of this.

I spent months reading and learning as much as I could. Every time I thought I had an “ah ha” moment a day or two later I was back scratching my head. I finally realized there is no spoon, and for me the answer really is the three fund.
I used to use it, and my experience did not match what you're describing at all, so I take it that you signed up for direct indexing? Wealthfront's standard portfolio consists of pretty standard and solid ETFs.

livesoft
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by livesoft » Sun Jan 21, 2018 3:32 am

JFP_SF wrote:
Sat Jan 20, 2018 10:46 pm
The $3K is net (capital losses - capital gains), so it can be worth more to you, and you can also carry it forward [in unlimited amounts and use it to offset realized capital gains in any amount, and use that to offset ordinary income each year] at $3K a year. [...]
When I read that statement, it looked like only $3K a year of losses could be carried forward which is not what was meant.
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nasrullah
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by nasrullah » Sun Jan 21, 2018 10:24 am

drk wrote:
Sat Jan 20, 2018 11:50 pm
nasrullah wrote:
Sat Jan 20, 2018 10:39 pm
confusedinvestor wrote:
Sat Jan 20, 2018 7:53 pm
Hi Narullah,

Can you advise what did your CPA said about 'reality' of TLH for Robo?
nasrullah wrote:
Sat Jan 20, 2018 5:30 pm
My Wealthfront account and TLH has generated losses for me over the past couple of years. I was more excited about it until filing taxes and my CPA explained the reality to me.
I bought into the marketing of by the robos that TLH was this all amazing thing and you were a fool if you missed out. My first year I didn’t read the fine print/know about the $3k per year cap. The second year the real offset on my taxes was minimal.

My point is that TLH is sprinkles on a sundae. If it’s included automatically and for free then go for it. I would not use TLH as a determining factor on where to open an account. My rebalancing bands are going to dictate trading for me moving forward. If I can TLH at the same time fantastic but it won’t be the driving concern.

The lesson I learned from this forum and the recommended books is straightforward: simplicity, costs, tax efficiency and consistency are what you need to focus on. Wealthfront generates 0.25% from you in management fees. Schwab does it by a) holding cash in you account and b) investing in their funds. Both will auto trade and TLH for you which will move you in and out of different expense ratio funds. It took me a while but I realized that it’s better for me to have this money working for me, not paying someone else.

On the simplicity side I’m in the process of moving to Vanguard. My account statement from Wealthfront is almost 30 pages of different holdings. When you look at the accounts online all of this is hidden from you. It’s not until you dig deep before you realize what’s really going on. I’m going to pay PAS initially just to figure out the best plan to unwind all of this.

I spent months reading and learning as much as I could. Every time I thought I had an “ah ha” moment a day or two later I was back scratching my head. I finally realized there is no spoon, and for me the answer really is the three fund.
I used to use it, and my experience did not match what you're describing at all, so I take it that you signed up for direct indexing? Wealthfront's standard portfolio consists of pretty standard and solid ETFs.
Correct I have both the direct indexing and advanced indexing on my account.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

nasrullah
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by nasrullah » Sun Jan 21, 2018 10:26 am

livesoft wrote:
Sun Jan 21, 2018 3:32 am
JFP_SF wrote:
Sat Jan 20, 2018 10:46 pm
The $3K is net (capital losses - capital gains), so it can be worth more to you, and you can also carry it forward [in unlimited amounts and use it to offset realized capital gains in any amount, and use that to offset ordinary income each year] at $3K a year. [...]
When I read that statement, it looked like only $3K a year of losses could be carried forward which is not what was meant.
Correct. I’m not arguing against TLH. I’m just saying it’s not the magic I believed from the marketing.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

drk
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by drk » Sun Jan 21, 2018 12:33 pm

nasrullah wrote:
Sun Jan 21, 2018 10:24 am
Correct I have both the direct indexing and advanced indexing on my account.
Got it. That makes more sense then. I can see how that could quickly turn into a mess. Did it at least generate sufficient losses that you could carry them over into future years?

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randomizer
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by randomizer » Sun Jan 21, 2018 12:45 pm

Not interested in the robos. TLH is easy enough to do, and without the higher robo expense ratios.
75:25 — HODL the course!

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whodidntante
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by whodidntante » Sun Jan 21, 2018 1:04 pm

US bonds were down about 0.5% last week. I hope the robots exploited that edge.

wootwoot
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by wootwoot » Sun Jan 21, 2018 1:32 pm

whodidntante wrote:
Sun Jan 21, 2018 1:04 pm
US bonds were down about 0.5% last week. I hope the robots exploited that edge.
My wealthfront account did :sharebeer

JFP_SF
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by JFP_SF » Sun Jan 21, 2018 1:51 pm

livesoft wrote:
Sun Jan 21, 2018 3:32 am
JFP_SF wrote:
Sat Jan 20, 2018 10:46 pm
The $3K is net (capital losses - capital gains), so it can be worth more to you, and you can also carry it forward [in unlimited amounts and use it to offset realized capital gains in any amount, and use that to offset ordinary income each year] at $3K a year. [...]
When I read that statement, it looked like only $3K a year of losses could be carried forward which is not what was meant.
Correct, I phrased it badly

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sun Jan 21, 2018 3:19 pm

Hi, How do you know that your WF account did ?

I cant tell from my Schwab Robo and one one in Schwab can explain how much (IF ANY) was harvested last year or this year.

Looks like I am impacted by Schwab's marketing gimic of Auto TLH and paying high Robo ER with REITS/Commodities in Taxable. Sad.
wootwoot wrote:
Sun Jan 21, 2018 1:32 pm
whodidntante wrote:
Sun Jan 21, 2018 1:04 pm
US bonds were down about 0.5% last week. I hope the robots exploited that edge.
My wealthfront account did :sharebeer

JFP_SF
Posts: 76
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by JFP_SF » Sun Jan 21, 2018 3:27 pm

confusedinvestor wrote:
Sun Jan 21, 2018 3:19 pm
Hi, How do you know that your WF account did ?

I cant tell from my Schwab Robo and one one in Schwab can explain how much (IF ANY) was harvested last year or this year.

Looks like I am impacted by Schwab's marketing gimic of Auto TLH and paying high Robo ER with REITS/Commodities in Taxable. Sad.
wootwoot wrote:
Sun Jan 21, 2018 1:32 pm
whodidntante wrote:
Sun Jan 21, 2018 1:04 pm
US bonds were down about 0.5% last week. I hope the robots exploited that edge.
My wealthfront account did :sharebeer
Simply look at your activity in your Schwab account. If they sold an ETF and bought the matching ETF, they did TLH.

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sun Jan 21, 2018 4:03 pm

Thank you. My SIP Activity has No Sales for last 9 months since April 2017, so i guess no TLH, except under-performance from 3 Fund and more taxes b/c of REITS/Commodities etc....

Why do you guys choose Robo where Robos are more expensive vs 3 Fund ?

I bought into their marking of "Auto" TLH as i am not savvy enough for "manual" TLH
JFP_SF wrote:
Sun Jan 21, 2018 3:27 pm

Simply look at your activity in your Schwab account. If they sold an ETF and bought the matching ETF, they did TLH.

livesoft
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by livesoft » Sun Jan 21, 2018 4:34 pm

Is it fair to write that practically all the Robos are using small-cap and value- tilted portfolios and models for their clients? So when small-cap value does poorly as it did in 2017, then all the Robos should trail the performance of a 3-fund total market weighted portfolio unless the Robos do some judicious market timing or cheating.
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drk
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by drk » Sun Jan 21, 2018 4:43 pm

livesoft wrote:
Sun Jan 21, 2018 4:34 pm
Is it fair to write that practically all the Robos are using small-cap and value- tilted portfolios and models for their clients? So when small-cap value does poorly as it did in 2017, then all the Robos should trail the performance of a 3-fund total market weighted portfolio unless the Robos do some judicious market timing or cheating.
Rather than small cap and value, Wealthfront's portfolios tilt to emerging markets (VWO/IEMG/SCHE, meaning there's potentially an extra tilt to South Korea) and large dividend-payers (VIG/DVY/SCHD and, realistically, XLE/VDE).

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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by KyleAAA » Sun Jan 21, 2018 4:56 pm

nasrullah wrote:
Sun Jan 21, 2018 10:26 am
livesoft wrote:
Sun Jan 21, 2018 3:32 am
JFP_SF wrote:
Sat Jan 20, 2018 10:46 pm
The $3K is net (capital losses - capital gains), so it can be worth more to you, and you can also carry it forward [in unlimited amounts and use it to offset realized capital gains in any amount, and use that to offset ordinary income each year] at $3K a year. [...]
When I read that statement, it looked like only $3K a year of losses could be carried forward which is not what was meant.
Correct. I’m not arguing against TLH. I’m just saying it’s not the magic I believed from the marketing.
It’s not magic, but it’s also true the benefits aren’t going to show up every year, especially a year when most things are going up and volatility is low. Ask those who were TLHing in 2008 how amazing it can be, though. I wouldn’t judge its efficacy based on 1 or 2 years.

greybus
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by greybus » Sun Jan 21, 2018 8:25 pm

livesoft wrote:
Sun Jan 21, 2018 4:34 pm
Is it fair to write that practically all the Robos are using small-cap and value- tilted portfolios and models for their clients? So when small-cap value does poorly as it did in 2017, then all the Robos should trail the performance of a 3-fund total market weighted portfolio unless the Robos do some judicious market timing or cheating.
No, each roboadvisor allocation has their own tilts. This is an old article but reviews many different robos and their tilts http://www.etf.com/sections/blog/22982- ... nopaging=1. There's also my own old Google Sheets post that lists out a bunch of Robos and their allocations and fees [might be outdated by now, make a copy and update] viewtopic.php?t=160555&start=200#p2420538.

I use Wisebanyan. WB is growth/market-cap driven.

For the original OP, you cannot compare robos to each other since that's essentially comparing different asset allocations to other ones and trying to predict which one will come out ahead over 30 years. If you are only looking at short term results, then you need to ask yourself more basic questions.

If you don't want to pay for a robo/TLH or don't see the value, but want the convenience of a Robo, you still have a few other options: Wisebanyan is free (with no TLH). If you do elect to use TLH, it's capped at $240/yr and not linked to AUM. People always question their size and business model/sustainability, but their website/interface is very usable and their overall feel is like Betterment. M1 Finance is now free. It's even smaller than Wisebanyan, and there are a couple of threads excited about them here now. You can craft your own custom asset allocation so that is very attractive. They do not offer any TLH at all. M1 does make money off your order flow and performs block trading, as most Robos do. You can always go to Motif or Folio and do "automated" basket investing for the cost of your trades, which can be fairly economical against a large portfolio. You can use Motif's Horizon portfolios for free, or buy Merriman's Ultimate or Merriman's new Target Date at Motif for the cost of the trade with no ongoing AUM.

livesoft
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by livesoft » Sun Jan 21, 2018 8:36 pm

greybus wrote:
Sun Jan 21, 2018 8:25 pm
No, each roboadvisor allocation has their own tilts. This is an old article but reviews many different robos and their tilts http://www.etf.com/sections/blog/22982- ... nopaging=1. There's also my own old Google Sheets post that lists out a bunch of Robos and their allocations and fees [might be outdated by now, make a copy and update] [url]viewtopic.php?
[...]
Thanks for that.
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wootwoot
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by wootwoot » Sun Jan 21, 2018 9:59 pm

confusedinvestor wrote:
Sun Jan 21, 2018 4:03 pm

Why do you guys choose Robo where Robos are more expensive vs 3 Fund ?
[/quote]

The lions share of my investments are in 401k accounts where I use low cost ETFs similar to a 4 fund portfolio. My Wealthfront account is small so I'm not charged a fee. I keep my small amount of taxable in WF and make monthly contributions. I'm not sure why so many bogleheads are anti-robo. It's actually pretty cool to watch when you're not being charged for the service.

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sun Jan 21, 2018 10:40 pm

I do find the independent Robo Report (https://theroboreport.com/ - you have to subscribe to get a copy) interesting and this independent firm shows since 2015 Schwab SIP offered better risk adjusted returns after net fees + ER vs Betterment, Vanguard is distant...

ER of my SIP is .19; cash-allocation is 6.5%.

In my IPS I wrote I invest in Robo SIP to automate "TLH" and I'm ok with under performance of SIP/Robos vs 3 Fund. Many Bogleheads' Similar Value+Small tilt wold have performed in-line with SIP with in-line ER.

My original question was do I really get TLH via SIP/Robo to achieve my goal of Auto TLH per my IPS ?

I guess only time will tell and thanks to all the feedback on this thread !
greybus wrote:
Sun Jan 21, 2018 8:25 pm


For the original OP, you cannot compare robos to each other since that's essentially comparing different asset allocations to other ones and trying to predict which one will come out ahead over 30 years. If you are only looking at short term results, then you need to ask yourself more basic questions.

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sun Jan 21, 2018 10:49 pm

wootwoot wrote:
Sun Jan 21, 2018 9:59 pm


The lions share of my investments are in 401k accounts where I use low cost ETFs similar to a 4 fund portfolio. My Wealthfront account is small so I'm not charged a fee. I keep my small amount of taxable in WF and make monthly contributions. I'm not sure why so many bogleheads are anti-robo. It's actually pretty cool to watch when you're not being charged for the service.
+1

Thanks you for your comment wootwoot - My Robo is also < 10% of my portfolio and my 401ks/Roths etc are all 3/4 Fund. I guess lot of Bogleheads are anti-robo b/c Robo makes Tax Location allocation across all accounts difficult, and, lot of Bogleheads differ from Vanguard as-well as eg Int Bonds, International Equity % Allocation...
Also lot of Bogleheads dont like Financial Advisors either but I do (as my spouse dont trust me on our finances) and my adviser only do 2 Fund portfolio of VT + TIPS as she thinks 3 Fund is complex.

WL2034
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by WL2034 » Sun Jan 21, 2018 11:01 pm

confusedinvestor wrote:
Sun Jan 21, 2018 10:49 pm

Also lot of Bogleheads dont like Financial Advisors either but I do (as my spouse dont trust me on our finances) and my adviser only do 2 Fund portfolio of VT + TIPS as she thinks 3 Fund is complex.
I find this intriguing. How much does your adviser charge AUM?

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Sun Jan 21, 2018 11:16 pm

1.1 with 6K/year ($500/month investments to encourage savings) which was $65/yr in fees. But I may not use her anymore as she has to increase her fees b/c she cant trade commission-free VT anyone in TD. She does hourly consultation $150/hr and she is a CFA+CFP.

WL2034 wrote:
Sun Jan 21, 2018 11:01 pm
confusedinvestor wrote:
Sun Jan 21, 2018 10:49 pm

Also lot of Bogleheads dont like Financial Advisors either but I do (as my spouse dont trust me on our finances) and my adviser only do 2 Fund portfolio of VT + TIPS as she thinks 3 Fund is complex.
I find this intriguing. How much does your adviser charge AUM?

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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by Noobvestor » Sun Jan 21, 2018 11:29 pm

The thing I always wonder is: what happens when you eventually leave the robo-advisor? Like if you transfer it all to Vanguard, will all the lot info be transferred into VG's systems, or will you have to keep track yourself? If the latter, not worth dealing with the headaches I would think of all the tiny lots generated from buying and selling over the years for a small tax benefit.
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by drk » Sun Jan 21, 2018 11:51 pm

Noobvestor wrote:
Sun Jan 21, 2018 11:29 pm
The thing I always wonder is: what happens when you eventually leave the robo-advisor? Like if you transfer it all to Vanguard, will all the lot info be transferred into VG's systems, or will you have to keep track yourself? If the latter, not worth dealing with the headaches I would think of all the tiny lots generated from buying and selling over the years for a small tax benefit.
I did this last year. I transferred everything via ACATS. All of the cost basis information transferred and was entered by Vanguard after a few messages and calls to pester them about it. There were numerous lots, but it's not that bad: everything becomes long-term soon enough, and all of the ETFs are ones that I feel fine holding.

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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by selters » Mon Jan 22, 2018 3:44 am

jcf wrote:
Sat Jan 20, 2018 5:46 pm
nasrullah wrote:
Sat Jan 20, 2018 5:34 pm

By the way. Would the $3k/year on you taxes be worth the 6% drag on your portfolio by being in cash?
Yea, 6% cash sounds a bit too much. In fact, Robo portfolio should not hold cash at all.
This sounds overblown to me. Isn't the 6% cash holding only a problem for investors who want to be 100% stocks?

It doesn't matter to me. I'm not even a US investor. Just an observation.

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Mon Jan 22, 2018 9:42 am

6% cash is part of Fixed income allocation and is considered a 0 yr duration bond, only drag would be 2-8 bps if we compare with short term bond (not compare cash drag with 100% stocks) and Schwab gives 15 - 25 bps interest on that cash. Cash drag is overblown. this was thoroughly backtested in this thread - viewtopic.php?t=223465

My original post is if Robo is of any worth for Auto TLH value vs Portfolio Complexity, loss in Tax Location, little tax-lots, etc

Sounds like Auto TLH would be little to no value in bigger context and i may let go Schwab SIP and move to 3 Fund
selters wrote:
Mon Jan 22, 2018 3:44 am
jcf wrote:
Sat Jan 20, 2018 5:46 pm
nasrullah wrote:
Sat Jan 20, 2018 5:34 pm

By the way. Would the $3k/year on you taxes be worth the 6% drag on your portfolio by being in cash?
Yea, 6% cash sounds a bit too much. In fact, Robo portfolio should not hold cash at all.
This sounds overblown to me. Isn't the 6% cash holding only a problem for investors who want to be 100% stocks?

It doesn't matter to me. I'm not even a US investor. Just an observation.

nasrullah
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by nasrullah » Sun Feb 11, 2018 10:06 pm

A couple of factors lead me to leave Wealthfront:

1. Not being able to set an AA across multiple accounts (Taxable, Tax Advantaged, etc...)
2. Not being able to use external holdings to adjust the AA with them (external 401K for example)
3. Inflexibility in the components of their AA
4. The 0.25% fee

I’m indebted to Wealthfront for starting me down this path of low cost investing, and if they ever address 1 & 2 I’d probably go back to their platform. I just don’t see that likely given their need to start generating higher levels of operating income. Granted they just crossed $10 Billion in managed assets, but at even $1 Trillion in managed assets they will be nowhere near income levels necessary to pay out their investors.

Wealthfront needs to figure out how to generate Billions of income per year (not just them, all of these robos do). FIrst step, offer people the ability to take loans out against their portfolios. My assumption of the next step is to expand on the whole WF100/WF500 idea - effectively their own ETF where they can attach additional fees. What else is anyone’s guess.

When (not if) circumstances dictate I will be TLH against my portfolio. I’m just not using TLH as the basis for why I’m with a specific institution.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by livesoft » Mon Feb 12, 2018 9:20 am

Thanks for the comments above.

I see a possible way to monetize TLH advice by an outfit that has access to all one's accounts, such as Personal Capital. Here is how it might work:

Software sees all your portfolio investments, transaction dates, etc. It looks in taxable account(s) for TLH opportunities. If it finds some, it creates a notice of what to do, but the notice is behind a paywall. You pay $1 and it shows you which investment (example: VTI) that it is suggesting you TLH, but it doesn't tell you which lots or what to buy for replacement shares, until ....

... you pay $10 for the next click where all is revealed but nothing is done. And if you pay another $10, another click actually submits the orders for you.
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bling
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by bling » Mon Feb 12, 2018 10:02 am

do these robo advisors take into account the various state laws?

for example, i live in NJ, which doesn't allow carry forward of losses, which means you should consider tax gain harvesting at the end of every year.

confusedinvestor
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Re: Automated Tax Loss Harvesting by Robo Advisor - Anyone with real results?

Post by confusedinvestor » Tue Feb 13, 2018 11:47 am

Hi Livesoft, Interesting business proposition. Well, I got carried away by Schwab's 'markerting fluff' of Auto TLH in Schwab's Robo (Intelligent Portfolio) > 50K account...

I'm hoping the market to tank so my STC gains will reduce so i can liquidate w/o limited tax gain impacts and do correct asset tax location...

oh well...i am getting wiser everyday...thanks to you for all your contributions and time!

livesoft wrote:
Mon Feb 12, 2018 9:20 am


... you pay $10 for the next click where all is revealed but nothing is done. And if you pay another $10, another click actually submits the orders for you.

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