SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. Securities and Exchange Commission as an investment adviser. SmartAsset Advisors, LLC ('SmartAsset'), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Keep in mind, however, that dividends are still taxable even if they’re reinvested. If you have dividend-paying stocks, consider reinvesting dividends to bolster your portfolio so you’re less tempted to sell off your winners. Reinvest dividends: Dividend reinvestment allows you to buy additional shares of stock without investing money out of pocket.

So you may benefit from keeping some of your assets in a tax-advantaged account, such as a 401(k) or IRA. Capital gains tax only applies to investments held in taxable brokerage accounts.

Consider asset location: Asset allocation is important for creating a diversified portfolio but asset location matters from a tax perspective.

However, losses may be harvested automatically if you’re using a robo-advisor to invest.

This is a strategy you can apply inside a taxable brokerage account. Harvest losses: Tax-loss harvesting allows you to offset capital gains by selling some of your investments at a loss.Whether this is realistic for you or not can depend on whether you’re an active day trader or you prefer a buy-and-hold approach to building a portfolio. Hold investments longer: Avoiding the short-term capital gains tax rate may be as simple as holding on to investments longer than a year.

Capital gains tax brackets 2021 irs