Performance of manual was robo-advisor TLH
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Performance of manual was robo-advisor TLH
I'm curious as to how much in TLH opportunities I may be missing out by not using a robo-advisor. How can I find out how a robo-advisor did (total TLH generated) for a given year? Is this historical data from robo advisors (eg: Betterment, Wealthfront, etc.) publicly available?
Let's assume I stand to save via TLH. For the purposes of this post, assume a two-fund, 80/20 portfolio of very low 7 digits, and a marginal fed+state rate of 45%, and a 5% contribution of the initial portfolio amount, spread monthly through the year.
The question I'm wanting to answer: I did TLH in 2020 and recently, but almost never do unless there's a big drop. Am I missing out by not TLH'ing more manually, or by not using a robo-advisor?
Let's assume I stand to save via TLH. For the purposes of this post, assume a two-fund, 80/20 portfolio of very low 7 digits, and a marginal fed+state rate of 45%, and a 5% contribution of the initial portfolio amount, spread monthly through the year.
The question I'm wanting to answer: I did TLH in 2020 and recently, but almost never do unless there's a big drop. Am I missing out by not TLH'ing more manually, or by not using a robo-advisor?
Last edited by DoubleClick on Thu May 26, 2022 1:26 am, edited 2 times in total.
Re: Performance of manual was robo-advisor TLH
We need to have folks that ACTUALLY HAVE USE TLH WITH A ROBO ADVISOR to report on this thread. Good luck with that!
See this from 2015: viewtopic.php?p=2613550#p2613550
And this from last Saturday: viewtopic.php?p=6688404#p6688404
See this from 2015: viewtopic.php?p=2613550#p2613550
And this from last Saturday: viewtopic.php?p=6688404#p6688404
Last edited by livesoft on Tue May 24, 2022 12:30 pm, edited 1 time in total.
Re: Performance of manual was robo-advisor TLH
I don't remember the outcome- did this thread answer the question?
viewtopic.php?t=378135
viewtopic.php?t=378135
Re: Performance of manual was robo-advisor TLH
This is a very hard question to answer for 2 reasons.
The first is that you would need a homogeneous pool of investors. Basically the same asset allocation based on similar risk tolerances (which is tied to wealth), goals, etc. Take yourself as a example. I am sure ESPP is going to have a impact on your asset allocation. The standard for this stuff is GIPS. It is the standard because it sets the bar high.
The second is that it will not tell you much. While I strongly believe in the theory I know enough about it to know that it is highly time and path dependent. It works best when there is high volatility and high asset correlations. Put in different inputs into your model and you are going to get different results.
The first is that you would need a homogeneous pool of investors. Basically the same asset allocation based on similar risk tolerances (which is tied to wealth), goals, etc. Take yourself as a example. I am sure ESPP is going to have a impact on your asset allocation. The standard for this stuff is GIPS. It is the standard because it sets the bar high.
The second is that it will not tell you much. While I strongly believe in the theory I know enough about it to know that it is highly time and path dependent. It works best when there is high volatility and high asset correlations. Put in different inputs into your model and you are going to get different results.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
- arcticpineapplecorp.
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Re: Performance of manual was robo-advisor TLH
even if you get the answer, you also have to factor in what is it worth it in time to you to have a robot tax loss harvest instead?
before you discount this value remember you're discounting the value of your time if you do. Don't just say, "well, I won't be tax loss harvesting that often..."
you have to be watching the market to know when the opportunities to harvest have arrived.
you might have to deal with anxiety of timing wrong (not harvesting at the best price), etc. (person specific)
you might have frustration with the mechanical issues (depending upon what brokerage you use), i.e., did the trade not go through? was there a glitch? did you have a fat finger event or type in the wrong ticker (I saw just today someone posted and used a wrong/unintended ticker and had to edit that. no effect in a post, but could be costly with money)
and so on.
I'm not saying these are reasons to use a robo advisor, I'm just saying it should be factored in to the value that a robo advisor can provide. there is a higher cost for robo vs. manual because robo is saving you the time.
before you discount this value remember you're discounting the value of your time if you do. Don't just say, "well, I won't be tax loss harvesting that often..."
you have to be watching the market to know when the opportunities to harvest have arrived.
you might have to deal with anxiety of timing wrong (not harvesting at the best price), etc. (person specific)
you might have frustration with the mechanical issues (depending upon what brokerage you use), i.e., did the trade not go through? was there a glitch? did you have a fat finger event or type in the wrong ticker (I saw just today someone posted and used a wrong/unintended ticker and had to edit that. no effect in a post, but could be costly with money)
and so on.
I'm not saying these are reasons to use a robo advisor, I'm just saying it should be factored in to the value that a robo advisor can provide. there is a higher cost for robo vs. manual because robo is saving you the time.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
Re: Performance of manual was robo-advisor TLH
Are the robos free now? I thought above a certain asset level there was an AUM fee. So you'd have to include that in your calculation.
Re: Performance of manual was robo-advisor TLH
You have made some false assumptions. First, the time to TLH is less than the time you spent on this thread. Second, you can set up in a less than minute alerts that your brokerage will send you. So you do NOT HAVE TO BE WATCHING the market. For instance. I have ZERO TLH opportunities until the market drops another 36%. Not gonna happen anytime soon, so there is no watching at all.arcticpineapplecorp. wrote: ↑Tue May 24, 2022 1:01 pm even if you get the answer, you also have to factor in what is it worth it in time to you to have a robot tax loss harvest instead?
before you discount this value remember you're discounting the value of your time if you do. Don't just say, "well, I won't be tax loss harvesting that often..."
you have to be watching the market to know when the opportunities to harvest have arrived.
- arcticpineapplecorp.
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Re: Performance of manual was robo-advisor TLH
do all brokerages (i.e., vanguard?) offer this auto alert service?livesoft wrote: ↑Tue May 24, 2022 1:12 pmYou have made some false assumptions. First, the time to TLH is less than the time you spent on this thread. Second, you can set up in a less than minute alerts that your brokerage will send you. So you do NOT HAVE TO BE WATCHING the market. For instance. I have ZERO TLH opportunities until the market drops another 36%. Not gonna happen anytime soon, so there is no watching at all.arcticpineapplecorp. wrote: ↑Tue May 24, 2022 1:01 pm even if you get the answer, you also have to factor in what is it worth it in time to you to have a robot tax loss harvest instead?
before you discount this value remember you're discounting the value of your time if you do. Don't just say, "well, I won't be tax loss harvesting that often..."
you have to be watching the market to know when the opportunities to harvest have arrived.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
Re: Performance of manual was robo-advisor TLH
Vanguard does and all my other brokerages do as well.arcticpineapplecorp. wrote: ↑Tue May 24, 2022 1:16 pm do all brokerages (i.e., vanguard?) offer this auto alert service?
Re: Performance of manual was robo-advisor TLH
See: viewtopic.php?t=150267arcticpineapplecorp. wrote: ↑Tue May 24, 2022 1:16 pmdo all brokerages (i.e., vanguard?) offer this auto alert service?livesoft wrote: ↑Tue May 24, 2022 1:12 pmYou have made some false assumptions. First, the time to TLH is less than the time you spent on this thread. Second, you can set up in a less than minute alerts that your brokerage will send you. So you do NOT HAVE TO BE WATCHING the market. For instance. I have ZERO TLH opportunities until the market drops another 36%. Not gonna happen anytime soon, so there is no watching at all.arcticpineapplecorp. wrote: ↑Tue May 24, 2022 1:01 pm even if you get the answer, you also have to factor in what is it worth it in time to you to have a robot tax loss harvest instead?
before you discount this value remember you're discounting the value of your time if you do. Don't just say, "well, I won't be tax loss harvesting that often..."
you have to be watching the market to know when the opportunities to harvest have arrived.
- arcticpineapplecorp.
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Re: Performance of manual was robo-advisor TLH
thanks but that link is to using portfolio watch to do rebalancing. definitely not my idea of "automated".
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
- arcticpineapplecorp.
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- Joined: Tue Mar 06, 2012 8:22 pm
Re: Performance of manual was robo-advisor TLH
thanks. good to know.livesoft wrote: ↑Tue May 24, 2022 3:08 pmVanguard does and all my other brokerages do as well.arcticpineapplecorp. wrote: ↑Tue May 24, 2022 1:16 pm do all brokerages (i.e., vanguard?) offer this auto alert service?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
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Re: Performance of manual was robo-advisor TLH
Very helpful pointers, thanks for both. Your insight in the second post is helpful. It's contending that one can manually TLH without closely watching the market, and more or less do as well as the robos. That's my sense too, though I'd love to see data if it's available. You're right, actual user data would be most valuable.livesoft wrote: ↑Tue May 24, 2022 12:27 pm We need to have folks that ACTUALLY HAVE USE TLH WITH A ROBO ADVISOR to report on this thread. Good luck with that!
See this from 2015: viewtopic.php?p=2613550#p2613550
And this from last Saturday: viewtopic.php?p=6688404#p6688404
And of course, helpful to remember TLH is a moot point once one is a couple years into retirement.