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August 21.2025

2 Minutes Read

Unlock Investment Potential with Betterment's Tax Loss Harvesting Methodology

Illustration of Betterment's tax loss harvesting methodology with magnifying glass and dollar bills.

Understanding Tax Loss Harvesting: A Smart Strategy for Investors

Tax loss harvesting is a sophisticated method that can enhance the value of your investments, especially during market fluctuations. This strategy has traditionally been a tool for wealthy investors, but thanks to platforms like Betterment, it is now accessible to everyone.

Streamlined and Automated: The Betterment Approach

Betterment stands out with its fully automated tax loss harvesting (TLH) tool, enabling investors to harness opportunities whenever market volatility results in temporary asset dips. With Betterment, there's no need for constant monitoring; the service scans portfolios to identify ideal moments to harvest losses while minimizing the risk of deviating from a target allocation.

The Value of Harvesting Losses: A Tax Advantage

So, why is tax loss harvesting valuable? When you sell an investment at a loss, that loss can offset other capital gains you incur during the year, which in turn reduces your taxable income. For instance, if you've made substantial profits from different investments, loss harvesting can significantly reduce your tax bill. Even if losses exceed gains, you can use up to $3,000 of those losses against regular income, offering some relief to your tax obligations.

Best Practices for Leveraging Tax Loss Harvesting

To effectively use this strategy, it's essential to follow some best practices: Regularly review your portfolio, understand your investment horizon, and consider employing a platform that simplifies the process, like Betterment. By keeping a balanced approach, you can enjoy both the benefits of tax relief and maintaining market exposure, ensuring that your investment portfolio remains robust.

Concluding Thoughts: Embrace Tax Efficiency

Incorporating tax loss harvesting into your financial strategy can be a game-changer. It’s one of the smartest moves investors can make to boost after-tax returns. By understanding this strategy and utilizing tools offered by services like Betterment, you can engage in thoughtful investment management that not only preserves your capital but also potentially grows it over time.

Investments & Wealth Building

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Unlock Investment Potential with Betterment's Tax Loss Harvesting Methodology

Understanding Tax Loss Harvesting: A Smart Strategy for Investors

Streamlined and Automated: The Betterment Approach

The Value of Harvesting Losses: A Tax Advantage

Best Practices for Leveraging Tax Loss Harvesting

Concluding Thoughts: Embrace Tax Efficiency

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