Optimization Walkthrough

Tax-Loss Harvesting

Find harvestable losses in your portfolio and optimize for 0.85%–1.10% annual alpha from TLH alone.

001
Overview

What is Tax-Loss Harvesting?

Tax-loss harvesting (TLH) is the practice of selling investments at a loss to offset capital gains elsewhere in your portfolio. This reduces your tax bill without changing your market exposure (you immediately buy a similar—but not identical—security to maintain allocation). Rikdom scans your brokerage positions daily to identify harvestable lots, flags wash sale risks, and tracks your harvested losses over time.

002
Step by Step

Step-by-Step Guide

1. Connect Your Brokerage

TLH requires cost basis data. Navigate to Holdings → Accounts and connect via SnapTrade (Pro feature).

2. Review Opportunities

Navigate to Intelligence → Optimization → Tax-Loss Harvesting. The Scan tab shows harvestable lots.

  • Each row shows: Security, Lot Date, Quantity, Cost Basis, Current Value, Unrealized Loss
  • Lots are ranked by potential tax savings (loss x your marginal tax rate)
  • Wash sale warnings appear if you purchased the same security within 30 days
  • Status column: Available, Wash Sale Risk, Recently Harvested

3. Harvest Losses

Click “Harvest” on a lot to mark it as harvested (Rikdom doesn't execute trades—you do that in your brokerage).

  • Log into your brokerage and sell the specified lot (use tax-lot ID matching)
  • Immediately buy a similar (but not identical) security to maintain allocation
  • Example: Sell VTI (Vanguard Total Stock Market), buy ITOT (iShares Total Stock Market)
  • Mark the action as “Harvested” in Rikdom—it will disappear from the Scan tab and appear in the Action tab

4. Track Performance

The Status tab shows aggregate TLH performance over time.

  • Total Losses Harvested (year-to-date and all-time)
  • Estimated Tax Savings (assumes 24% marginal rate—adjust in settings)
  • Alpha contribution: tax savings / portfolio value = % annual boost
  • Target: 0.85%–1.10% alpha from TLH in a diversified taxable portfolio
003
Pro Tips

Pro Tips

  • •Avoid wash sales: Don't buy the same security 30 days before or after selling. Use ETF pairs (VTI/ITOT, VOO/SPLG) to stay compliant.
  • •Harvest small losses early: In volatile markets, small losses can become gains quickly. Don't wait for bigger losses—lock in tax benefits as they appear.
  • •Use specific lot ID matching: Most brokerages let you choose which lot to sell. Rikdom tells you the lot date—match it in your brokerage to harvest the exact loss identified.

Ready to Get Started?

Join Rikdom and start optimizing your portfolio for tax efficiency.

Start Your Free TrialBack to All Guides