Customization of capital gains - Financial definition

Customization of capital gains involves techniques such as tax-loss harvesting, selective selling of assets, and asset location strategies to optimize the tax impact on an investor’s portfolio. This practice is often employed by financial advisors and portfolio managers to enhance after-tax returns, considering the investor's overall financial goals, tax bracket, and investment horizon.

For instance, an investor might sell underperforming stocks to offset gains from profitable investments, thereby reducing taxable income. Additionally, different assets may be placed in taxable or tax-advantaged accounts to maximize tax efficiency.