As we approach year-end, many investors are turning their attention to tax-loss selling , the strategy of selling investments that have experienced a loss in order to offset capital gains and potentially reduce an investor’s tax liability . There are a few potential benefits of tax-loss selling . The primary benefit is the ability to use capital losses to offset capital gains .
If an investor has realized capital gains during the tax year, then realizing capital losses through the sale of other investments can help offset these gains. This could potentially reduce their overall tax liability. Tax-loss selling also provides an opportunity for investors to rebalance their portfolios. By selling underperforming investments, investors can reallocate their assets to align with their investment goals and risk tolerance. A third benefit is that investors may use tax-loss selling to exit investments that are no longer aligned with their investment strategy. This can help maintain a diversified portfolio and reduce the risk associated with concentrated holdings
Source: News Formal (newsformal.com)
Tax-Loss Selling Capital Gains Tax Liability Portfolio Rebalancing Diversified Investment Strategy
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