It's the end of the year: last chance to take stock of your 2011 tax obligations. As an investor, you should make particular note of any realized capital gains. Maybe you sold out of a top-performing asset class to keep your portfolio in balance. Maybe you liquidated some of your holdings to finance a new project or a new expense. In any case, if you sold shares at a profit then the IRS will be asking for their cut.

The good news is that some of your investments may have lost value. While not generally the sort of thing people celebrate, a capital loss provides you the opportunity to defer taxes by a method referred to as tax loss harvesting. In short, losses from one asset sale can be used to cancel gains elsewhere.

Read the rest of this post by Josh Tokle in the FutureAdvisor Research Notebook.

Not yet a FutureAdvisor user? Find out if your workplace retirement plan is supported and request an invite at https://www.futureadvisor.com/signup.

Your questions, comments, and suggestions are always welcome at advisors@futureadvisor.com.

 

Today we're announcing that the FutureAdvisor algorithms now include better diversification through application of the well known Fama-French Three Factor Model. Use of this model allows us to fine tune your risk vs. reward tradeoff by including an appropriate amount of lean towards small cap and value equities in an effort to maximize long term returns.

Highlights from the FutureAdvisor Research Notebook:

Check out recent posts from Josh Tokle of our Finance Team that explain the Fama-French Model and our lean towards small cap and value equities for long term investing.

Fama, French, and beyond: greater diversification means lower risk for your expected return

You're young: seek out higher returns by investing in small cap and value stocks

A graph from the above post demonstrates how small cap and value equities have outperformed large cap and growth equities over the last 80 years.

Within our app you will see two visible changes:

First, we show the position of the equities in your recommended portfolio compared to your current portfolio on the familiar size vs. style matrix.

Second, our recommendations include small cap and value funds within the domestic and foreign developed equity asset classes.

Not yet a FutureAdvisor user? Find out if your workplace retirement plan is supported and request an invite at https://www.futureadvisor.com/signup.

Your questions, comments, and suggestions are always welcome at advisors@futureadvisor.com.