Tax-Loss Harvesting Explained (Direct Indexing)

Tax-loss harvesting uses investment losses to help offset taxable gains while keeping the portfolio invested. With direct indexing, individual stocks can be harvested for losses rather than relying on a single index fund. In this video, Robert Yu, CFP® and David Haggard, CFA®, CFP® of Apollon Wealth Management cover: • How tax-loss harvesting can help manage capital gains taxes in a taxable brokerage account • Why direct indexing creates more opportunities to harvest losses than owning a single index fund • How a portfolio can stay close to an index while using individual positions to manage taxes over time CHAPTERS 1. How does tax-loss harvesting work? 2. Why can a taxable brokerage account be useful for ongoing savings? 3. Where do tax losses come from inside an index? 4. Why use direct indexing instead of an S&P 500 index fund? 5. What does tracking error mean in direct indexing? 6. How can similar stocks be used when harvesting a loss? 7. Is tax-loss harvesting a reaction to losing money? 8. How can harvested losses help manage concentrated positions? COMMON QUESTIONS Q: How does tax-loss harvesting work? A: Tax-loss harvesting involves selling investments that have declined in value so those realized losses may be used to offset taxable capital gains, subject to applicable tax rules. The strategy is designed around tax management while maintaining the portfolio’s broader investment approach. Q: What is direct indexing? A: Direct indexing involves owning a group of individual stocks designed to track an index rather than owning a single index fund. Because the investor holds many individual positions, there may be more opportunities to harvest losses within the portfolio. Q: Why not just buy an S&P 500 index fund? A: An index fund can closely track the S&P 500, but it generally gives the investor only one holding to sell for tax-loss purposes. Direct indexing may provide many individual positions that can be evaluated separately for potential losses. Q: Does tax-loss harvesting mean selling investments whenever they go down? A: No. As Robert and David explain, tax-loss harvesting is a planned tax-management strategy rather than a reaction to short-term losses. The goal is to manage taxes while keeping the portfolio aligned with its intended investment exposure. Q: Can tax-loss harvesting help with concentrated stock positions? A: Harvested losses may help offset gains as highly appreciated or concentrated positions are reduced over time. The advisors describe doing this gradually rather than automatically selling all highly appreciated positions at once. 📅 Talk to an advisor: https://apollonwealthmanagement.com/o... Apollon Wealth Management, LLC (“Apollon”) provides advice and make recommendations based on the specific needs and circumstances of each client. The information contained herein is intended for information purposes only and should not be considered investment advice. Market performance information and projections have been provided by third-party sources and, although believed to be reliable, have not been independently verified and its accuracy or completeness cannot be guaranteed. Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as on the date of this material and are subject to change. Past performance is no guarantee of future performance. Please contact your financial advisor with questions about your specific needs and circumstances. This content is not intended as tax or legal advice. Please consult a qualified tax or legal professional regarding your individual situation. #TaxLossHarvesting #RetirementPlanning #DirectIndexing