Year end is a popular time for tax planning strategies, Roth conversions, charitable gifts,

squeezing in those final tax deductible retirement account contributions, and of course,

the crowd favorite, good old tax loss harvesting. Forbes writes that besides reducing your taxes,

tax loss harvesting also frees up cash so you can buy new assets that may be

more likely to generate positive performance. Vanguard states that tax loss harvesting helps you

save on taxes, grow your portfolio, reduce cost, reduce risk, and turn volatility into an

opportunity. And one robo advisor in particular claims that

regular tax loss harvesting can improve your after tax returns by up to 1.8% per year.

Look, I'm all for pursuing strategies to help lower our taxes and ensure that we don't overpay the IRS. But far too often,

popular tax planning strategies are mistakenly evaluated each year in a vacuum. In other words,

we identify something that helps us save a quick buck on taxes this year, but we neglect

to understand what it might do to our tax bill in the future. In the moment,

tax loss harvesting feels like a no-brainer. You know, if you sold an investment earlier in the

year that went up in value and triggered a capital gains tax bill, it sounds pretty enticing

to be able to sell something else at a loss before the calendar turns to offset those taxes. And while tax

loss harvesting certainly has potential benefits and use cases, when you zoom out and evaluate the

impact of this tax strategy over a longer period of time, those benefits can get washed away

pretty quickly. Even worse, the short-term benefits can sometimes

turn into long-term drawbacks. So before you or your advisor race to your brokerage accounts this

December to start your year-end tradition of harvesting losses, I just want to revisit an

important episode that I published on this topic about 18 months ago. I'm generally

not a fan of replaying past episodes as I like to keep things fresh around here, but with three

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