The Silent Portfolio Killer

Taxes Kill Investment Returns.

We can help.

The average investor loses 1–2% of their annual returns to avoidable taxes. On a $1 million portfolio invested for 20 years at a 7% annualized return, a 2% tax drag would reduce your returns by over $1.2 million. Clearview Financial Partners builds tax-efficient strategies that help you keep more of what you've earned.

1–2% Lost Annually to Taxes
$1.2M+* Potential 20-Year Impact
35+ Years Experience

See What Taxes Are Costing You

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Three Ways Taxes Are Draining Your Wealth

Most investors focus on returns but overlook the largest controllable cost in their portfolio. Tax-inefficient investing silently compounds against you, year after year.

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Capital Gains Drag

Frequent trading and poorly timed rebalancing trigger short-term capital gains — taxed as ordinary income at rates up to 37%. Even long-term gains face rates up to 23.8% for high earners. A tax-aware approach can reduce this dramatically.

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Account Location Mistakes

Holding the wrong assets in the wrong accounts (taxable vs. tax-deferred vs. Roth) costs investors thousands annually. Strategic asset location is one of the simplest wins available.

Missed Harvesting Opportunities

Tax-loss harvesting can offset gains and reduce your tax bill by thousands each year — but only if it's done systematically and proactively.

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Direct Indexing: A Smarter, More Tax-Efficient Portfolio

Instead of buying an ETF that holds 500 stocks as a single package, Direct Indexing lets you own the individual stocks directly — giving your advisor the flexibility to harvest tax losses throughout the year while maintaining the same market exposure.

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Own Individual Stocks

Instead of one ETF, you hold 100-200 individual securities that replicate the index — giving you control at the position level.

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Harvest Losses Year-Round

When individual stocks decline, your advisor sells them to capture the loss — then reinvests in similar holdings to maintain your exposure.

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Offset Future Gains

Those accumulated losses offset gains when you sell — reducing your tax bill and putting more money back in your pocket.

In 2025, the S&P 500 returned 17.9% — yet the index experienced

an -18.9% drawdown along the way

Individual stocks fell even further. Direct Indexing captures those dips as tax losses. In an ETF, you can't.

ETF vs. Direct Indexing: A Side-by-Side Comparison

So how do you fight tax drag? Here's what happens when a $3M investor uses Direct Indexing instead of a traditional ETF.

Hypothetical example: $3,000,000 portfolio over 10 years at 7.2% gross annual return

Traditional ETF

Tax Paid

$511,938

After-Tax Cash Flow

$4,639,062

Direct Indexing

Tax Paid

$152,796

After-Tax Cash Flow

$4,809,204

$170,142 more in your pocket

After-tax cash flow difference using Direct Indexing vs. a traditional ETF, net of all fees.

†This example is based on hypothetical performance information. Assumes account is cash funded with the highest possible tax rates based on the S&P 500 Index. ETF assumes S&P 500 Index net of 0.03% fee. Direct Indexing assumes 0.16% investment expense and 0.50% advisory fee through Clearview Financial Partners. Direct Indexing strategy assumes approximately 44% of the account's original value will be harvested as losses over 10 years. Actual performance will vary. Investing involves risk, including possible loss of principal. Source: BlackRock Internal data and MSCI.

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Tax-Smart Investing Resources

Understand the strategies that can help you keep more of what you earn.

What Is Tax Drag and Why Does It Matter?

Tax drag is the reduction in your portfolio's returns caused by taxes on dividends, interest, and capital gains. Every time a taxable event occurs — selling a stock at a gain, receiving a dividend, or earning interest — a portion of your return goes to the IRS instead of staying invested and compounding. Studies from Morningstar show the average U.S. equity mutual fund loses between 1.5% and 2.0% of its annual return to taxes. Over 20 years, that seemingly small percentage can translate to hundreds of thousands of dollars in lost wealth. Understanding tax drag is the first step toward building a more tax-efficient portfolio.

Direct Indexing: A Tax-Efficient Alternative to ETFs

Direct indexing is an investment strategy where, instead of buying an ETF or mutual fund that holds hundreds of stocks as a single package, you own the individual stocks directly. This gives your advisor the flexibility to sell specific underperforming positions throughout the year to generate tax losses — a process called tax-loss harvesting — while maintaining overall exposure to the market. Those harvested losses can then be used to offset gains elsewhere in your portfolio, reducing your annual tax bill. For investors with taxable accounts of $250,000 or more, direct indexing can be a powerful tool for improving after-tax returns over time.

Understanding Capital Gains Tax Rates in 2025

Capital gains taxes apply when you sell an investment for more than you paid for it. The rate you pay depends on how long you held the asset. Short-term capital gains — on assets held for less than one year — are taxed as ordinary income at rates up to 37%. Long-term capital gains — on assets held for more than one year — are taxed at preferential rates of 0%, 15%, or 20%, depending on your income. High earners may also owe an additional 3.8% net investment income tax, bringing the effective top rate to 23.8%. Strategic timing of when you buy and sell, combined with tax-loss harvesting, can meaningfully reduce the capital gains taxes you pay each year.

Tax-Loss Harvesting: How It Works

Tax-loss harvesting is the practice of selling investments that have declined in value to realize a loss, which can then be used to offset taxable gains from other investments. The sold position is typically replaced with a similar (but not identical) investment to maintain your portfolio's overall allocation and market exposure. When done systematically, this strategy can reduce your tax bill year after year. Research suggests tax-loss harvesting can add 1% or more in excess annual return over time. However, it requires careful execution to avoid wash sale rules and to ensure your portfolio stays aligned with your long-term goals — which is why working with an experienced advisor matters.

Asset Location: The Right Investments in the Right Accounts

Asset location is the strategy of placing different types of investments in the most tax-appropriate accounts. For example, tax-inefficient investments like taxable bonds and high-turnover mutual funds are generally better suited for tax-deferred accounts such as IRAs and 401(k)s, where their income isn't taxed annually. Meanwhile, tax-efficient investments like index funds and long-term stock holdings tend to perform better in taxable brokerage accounts where they benefit from lower capital gains rates. Vanguard research has shown that thoughtful asset location can add between 0.05% and 0.30% in additional after-tax return annually — a benefit that compounds meaningfully over a multi-decade retirement.

Further Reading

Tax-Managed Equity & Direct Indexing — BlackRock → The Direct Indexing Landscape in 3 Charts — Morningstar → What Is Direct Indexing? — Investopedia → Tax-Loss Harvesting Explained — Investopedia → Direct Indexing: What It Is and How It Works — NerdWallet → What Is Tax Drag? — Investopedia → Capital Gains and Losses — IRS.gov → Is Your Portfolio Dragged Down by Taxes? — Barron's →

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