Stock crash consolation prize: Tax losses.
Sell
your losers to offset capital gains distributions from mutual funds and gains
from winners you’ve sold this year. You can even use losses to offset up to
$3,000 of regular income. You don’t even have to leave the market since you can
sell one item and simultaneously buy a similar but not identical item. Just
make sure not to buy back the loser within 30 days or else you won’t get to use
the loss. Do you have a large-cap, actively-managed fund at a loss? Sell it and
on the same same day buy a large-cap index fund. Voila. You’ll get the benefit
of the loss and still have almost the same exposure to the market. (This does
not work in retirement accounts.) Who said a market crash is all bad?
Larry Pike, CFA
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