The Tax-Optimized US Index Portfolio is Wealthfront's replacement for the US stock allocation of a diversified portfolio that permits for an enhanced form of Tax-Loss Harvesting. Combined with our Daily Tax-Loss Harvesting service, this could add as much as 2.03% to your annual investment performance. Available to taxable accounts with at least $100K.
Tax-Loss Harvesting is a technique used to lower your taxes while maintaining the expected risk and return profile of your portfolio. Wealthfront developed software to make this service, traditionally only available to accounts in excess of $5 million, available to all taxable accounts.
Unlike actively managed mutual funds, ETFs have very little turnover, which means you incur much lower capital gains taxes.
By using dividends to rebalance your portfolio throughout the year, we minimize asset sales, which in turn lowers your realized capital gains.
Regardless of the size of withdrawal, Wealthfront ensures your remaining portfolio is diversified and also sells shares based on your cost basis. As a result, Wealthfront minimizes your taxes even when you're withdrawing funds from your account.
Depending on the tax status of your accounts, we use different allocations for your portfolios. For example, we'll place bonds and real estate assets in your retirement accounts, where they can compound tax-free.
Direct Indexing conveniently and affordably enables you to directly own all the stocks in a major index (the S&P 500®), and harvest losses they might generate. These tax savings could be reinvested to generate significant value over time.
Transferring an outside brokerage account into a Wealthfront portfolio is simple — we'll manage the transfer in a tax-efficient manner automatically, all commission-free.