[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.