[zeroer]

Take a look at this chart of the SP500 over time: http://www.macrotrends.net/2324/sp-500-historical-chart-data

(Make sure to turn off inflation-adjusted)

I think you'll see that in the last 90 years, even the worst market crashes don't take the index down to a level lower than what it was 15 years prior. To put it another way, pick any time in the past 90 years, the S&P 500 is always higher 15 years later than that date and every day afterwards. Maybe slicing up your investments into finer-grained categories than the entire S&P 500 will help ... but I'm very skeptical that anyone can TLH for long periods successfully.

If you want to pay a perpetual 25 basis points per year for Wealthfront or Betterment, go ahead, but it seems unlikely to me you'll come out ahead of a simple index fund if you are investing long term.

[hesdeadjim]

I suppose there is no harm then in milking the tax loss harvesting for as long as it is profitable and then reevaluating performance in ten or fifteen years to see if it makes sense to switch to a lower cost provider like Vanguard.

Like I said though, I have seen very significant returns from my loss harvesting. Even without a yearly source of capital gains, it definitely does not hurt to collect the losses and use them later in life (for instance if you sell an investment property).

[zeroer]

There is a harm. In 15 years, if you decide you don't like Wealthfront, in order to move, you will have to sell all your assets and incur the capital gains.

[grzm]

This is true any time you move brokerages, is it not? If, at some time in the future, you chose to move from Vanguard to Wealthfront to take advantage of tax loss harvesting, you'd pay capital gains tax as well.

[matwood]

> This is true any time you move brokerages, is it not?

No. If you own the assets directly, and they are traded on the exchange (like the ETFs WF/Betterment use) they can be transferred around without triggering a sale event. Target date funds and the like would probably have to be sold.

I have my tax advantage at VG and my taxable has been all over the place finally settling with CS for now.

[grzm]

Okay, you have me a little confused now :) I read my parent as saying that in order to move investments out of Wealthfront, you'll need to sell and pay capital gains. I read your comment saying this isn't necessarily the case. There seems to be some disagreement here. What am I misunderstanding? The ins and outs of investments and tax ramifications can sometimes seem very opaque to me, so I appreciate any education on this front.

[zeroer]

I stand corrected. I thought they had their own mutual funds that they charge an expense ratio on, but I took a closer look at their site and it looks like they put you in third-party mutual funds from e.g. Vanguard and iShares. Since this is the case, you can just do a transfer-in-kind to another brokerage if you want to leave, and this is not a taxable event. (Sorry for my mistake!)

[matwood]

Which is why I said own the funds 'directly'. I'm not sure if WF/Betterment pool your money and then carve up % of funds or if you end up the actual owner. They may force you to liquidate to leave, which IMO is another strike against using them.

With regular brokerages you can move stocks/funds around with a transfer.