8 Top Tax-Saving Tips for Rising Markets

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If there was one theme that dominated discussions about smart portfolio management in 2022 — apart from the brutal 20%-plus losses suffered by many investors — it was probably tax-loss harvesting.

Simply put, the exceptionally challenging year that was 2022 demonstrated to many investors that tax-loss harvesting offers a silver lining to dramatic market sell-offs.

Experts say tax-loss harvesting is a solid strategy that many advisors can use to help mitigate the bite that realizing capital gains can impose on clients in taxable accounts. When clients sell appreciated holdings, these gains can be offset in whole or in part by realizing losses on other holdings in the client’s portfolio.

However, as noted in a new blog post by Jeremy Milleson, director of investment strategy at Parametric Portfolio Associates, regular loss harvesting isn’t the only way to reduce a portfolio’s tax bill, especially when the tides turn as dramatically as they have in 2023, which has proven to be one of the best rebound years in the market’s history.

As such, it is important for advisors to be well versed in other tax-mitigating opportunities that present themselves in rising markets, and Milleson’s blog post offers some timely food for thought. Milleson says the growing use and sophistication of separately managed accounts and direct-indexed portfolios are particularly relevant for advisors to consider today.

See the slideshow for a rundown of Milleson’s top tips and insights about the most important tax-management techniques for 2023 and beyond. As Milleson and other experts argue, advisors who fail to deliver more sophisticated tax-mitigation services will likely find themselves falling behind their tax-savvier peers.