Global stocks and bonds are both down on the year1 and volatility is still elevated — but broad losses offer big opportunities for tax-loss harvesting. Learn more.
Harvesting losses means selling investments in taxable accounts that have lost value to offset capital gains elsewhere and help reduce taxes owed.
What Happens When You Sell a Position That Has Lost Value?
What is the Wash-Sale rule?
Tax swaps enable you to invest proceeds from the sale of losing position in a more permanent way to lower costs or target new markets.
Expense ratios for SPDR Portfolio ETFs are 93% lower than the median US-listed mutual fund.3 Replacing higher-fee mutual funds with low-cost core equity and bond ETFs may help you build more cost-efficient portfolios.
Is ESG a priority? There are more ESG ETFs than ever to support broad market exposures. You can build a more ESG-centric portfolio by harvesting losses in traditional core holdings and swapping them for ESG ETFs.
Consider these active SPDR® ETFs as swaps to seek higher yields while navigating ongoing volatility.
Compare Swaps Using Morningstar Tool
The time to harvest losses is when losses occur. Investments that are down early in the year could bounce back into positive territory — resulting in missed opportunities to sell losers and book losses to offset gains.
To get maximum value from harvesting losses, take a long-term view of the asset and your needs when making decisions and consider:
If a loss is less than $2,000, transaction and tracking costs may erode tax savings.
The longer you plan to hold the asset, the greater the chance that the tax savings you’ve re-invested will grow.
If an asset will be left to heirs, there’s less need to measure the value of harvesting a current loss against future taxes due should the asset appreciate. Because heirs receive a step-up in basis, growth doesn’t turn into a future tax liability.
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1 Bloomberg Finance L.P., as of 08/23/2022. Global stocks and bonds represented as the MSCI World and Bloomberg Global Aggregate, respectively. Both global stocks and bonds have lost 14% year to date. Past performance is not an indicator of future performance. It is not possible to directly invest in an index.
2 Morningstar, State Street Global Advisors, as of 07/31/2022. The median expense ratio of the 22 SPDR Portfolio ETFs compared to the median expense ratio of oldest share class US domiciled mutual funds of similar Morningstar Categories, which includes active and passive funds. The median expense ratio of oldest share class passive US domiciled mutual funds of similar Morningstar Categories is 0.17%. SPDR Portfolio ETFs are 74% lower than the average passive US domiciled mutual fund.
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Investing in high yield fixed income securities, otherwise known as “junk bonds,” is considered speculative and involves greater risk of loss of principal and interest than investing in investment-grade fixed income securities. These lower-quality debt securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
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