[prdonahue]

You'll get more fine grained tax management, e.g., tax-loss harvesting if using something like Wealthfront. You can't pass along these individual losses (and net against other gains/carry over to future years) with a target date fund.

I actually use Vanguard target date for my tax-advantaged accounts, but I use Wealthfront for taxable account.

[simo7]

Tax loss harvesting only makes sense if you keep on buying and selling multiple funds/products.

Hold only one index fund, hold it long-term and the problem vanishes: all the gains are not taxed until you sell the fund and they are always net of losses.

Not to mention the massive benefit of deferring taxes in a compounding context.

[mrkurt]

Wealthfront buys the individual shares that track an index. When shares lose value, they'll sell those and buy other shares that are equivalent.

It worked pretty well for me in 2016. I was up ~11% total and about to deduct about 6% in losses.

[pscsbs]

However, that 6% is capped by the IRS at $3,000 per year.

[mrkurt]

No, it offsets my other capital gains that year. $3k per year after that can be applied to normal income. Or it can all be applied to future capital gains.

[ctchocula]

It's nice that the rest of the loss can be carried over to future years.