Tax-Loss Harvesting Strategies

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Text, J.P. Morgan Private Bank. Are Taxes Eating Up Your Investment Returns?

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Over time, taxes can erode your returns.

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Text, Nancy Rooney, Managing Director, Global Head of Managed Solutions.

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And while taxes can't be avoided, they can be managed. And we call that being tax smart. So how do you build tax awareness into your portfolio? One way is through tax loss harvesting.

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Text, What's Tax-Loss Harvesting and Why Does It Matter?

An animation of a blank bar graph labeled Stock Values shows the bars moving up and down.

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Stocks go up and down. It's a natural part of what they do. And as an investor, you have a choice.

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Next to the bar graph animation, a chart labeled Market Volatility has months on the x-axis and 10s on the y-axis. A line graph moves up and down along the chart.

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You can ride along in that journey. And usually, holding and not trying to time the market is good. You're not a victim to the quick ups and downs of the market.

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The Market Volatility chart stops.

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But in the end, it may not be as tax efficient as it could be.

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Side-by-side panels. The first is labeled Returns and shows a piggy bank and coins. The second is labeled Tax Bill and shows a bill saying "Due."

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Let's say you have $100,000 invested into Stock A.

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The Market Volatility animation next to a panel labeled Stock A, which shows a rapidly increasing Loss figure and a decreasing Value figure, along with a bar showing loss in pink and value in gray.

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Over the course of the month, the price fell by 40%. When your stock has depreciated, you can now lock in that loss by selling Stock A. And

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The data from the Stock A panel moves to a new panel labeled Sell, showing Loss at $40,000 and value at $60,000.

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since you want to keep your portfolio in line with your strategy's objectives, you buy and now hold $60,000 of Stock B in a very similar investment.

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Two panels labeled Similar Stock, showing a blank bar graph, and Buy. A bar from the first panel slides to the Buy panel, next to a Value figure of $60,000.

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And this natural journey of ups and downs continues.

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Two rows of panels. The top shows Loss, Sell, Similar Stock, and Buy. The bottom shows Harvested Losses, with a small brown square, and Portfolio, showing two bar graphs reflecting gains in green and losses in red.

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All along, you repeat this process and continue to pick up a bit of these tax benefits.

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Bars move from one panel to another.

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And because your tax smart, now you're building up a reserve of losses that you can then use to offset capital gains in other parts of your portfolio, potentially resulting in a lower tax bill at the end of the year.

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A new Harvested Losses panel appears, showing a jar filling with coins dropped down from the other Harvested Losses panel just above. On its left is the Returns panel with a piggy bank, and to its right is the Tax Bill panel, showing a bill marked Due. Coins then float from the piggy bank to the other two panels.

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That is called tax alpha. It's the incremental value add resulting from tax efficient management. At JP Morgan, we implement tax loss harvesting for you in a way that's customized and cost efficient, which essentially allows you to get exposure to broad market indices, such as the S&P 500 or even certain active strategies. Our systematic approach actively looks for opportunities on a daily basis to harvest losses. We're essentially using the market's natural volatility to create potential tax savings for you.

Now, for investors that have high embedded gains and don't necessarily want to pay a hefty tax bill to make the switch, we offer a transition process that is unique to your preferences, as well as your tax sensitivity. Taxes are a part of life. And we believe that with the right strategies, they can be managed for better outcomes. Speak to your JP Morgan team to learn more about how tax smart strategies can add tax alpha for your portfolio.

Cut!

Yeah.

Great.

Good job.

Great.

Good job.

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Nancy walks away.

Text, Speak to your J.P. Morgan Team.

Logo, J.P. Morgan Private Bank.