Tax-Loss Harvesting

Tax-loss harvesting is selling an investment at a loss to realize that loss for tax purposes, then using it to offset capital gains elsewhere in the portfolio (and up to $3,000 of ordinary income per year), while staying invested by buying a similar (but not "substantially identical") replacement security.

The strategy has to be executed carefully to avoid the wash sale rule, which disallows the tax loss if you buy back the same or a substantially identical security within 30 days before or after the sale. Robo-advisors have largely automated this process for taxable accounts.