What is tax-loss harvesting and how can it benefit me?

What is tax-loss harvesting and how can it benefit me?

Tax-loss harvesting is a strategy where you sell investments at a loss to offset capital gains taxes. It can reduce your tax bill.

How do I implement tax-loss harvesting in my investment strategy?

To implement it, identify losing investments, sell them, and reinvest in similar assets to maintain your portfolio's balance.

Are there any risks associated with tax-loss harvesting?

Yes, risks include potential market changes and the wash-sale rule, which disallows claiming a loss if you repurchase the same asset too soon.

Can I use tax-loss harvesting for my retirement accounts?

Generally, tax-loss harvesting applies to taxable accounts. Retirement accounts like IRAs have different tax rules.

What are some common mistakes to avoid with tax-loss harvesting?

Common mistakes include not tracking your losses properly, ignoring the wash-sale rule, and failing to consider the long-term impact on your portfolio.