Time to Dump your portfolio losers – Now
SmartMoney reminds us to harvest loses and take advantage of generous tax benefits before January 1st. As the end of the year draws near, hordes of other investors will also dump their losers for tax purposes. By selling “with the herd”, you will likely get a lower price. And by selling sooner, you will break the habit of what’s called loss aversion, in which investors hold on to losers too long “in hopes the stock will turn around.” It’s rarely a winning strategy. The losses you generate can be used to offset gains. Any losses not used this year can be carried forward to offset future, perhaps higher, taxes. Besides, harvesting your losers offers a great opprtunity to upgrade to better-performing holdings.
