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Thanks for the warning but I would just buy something else.
It's just that if you have any gains from sales in 2015, selling losses against them makes sense. I post this as a response to you, but also for the others just lurking. Dec 31 is a hard date that no one should ignore if they are probably going to divest something.
If you have no gains, but still could sell a loser ( a "dog" ) in 2015, if you are in the 15% bracket, it's worth $450 to harvest your losses that you can use to buy something better.
If you are in the 25% bracket, that $3k is worth $750.
If you have gains of, say $3k and can find $6 of losses then you can double the above.
Harvesting your losses and cleaning up your portfolio in essence is harvesting cash that you can put to use to buy better prospects.
Since I was using Betterment, they harvested my losses automatically and with the big Sept dip, that really added up, which will be helpful come tax time. Of course I'd prefer not to have losses, but if you gotta have them....
I prefer not to make predictions (as a trader); I just follow price (volume as well) and ignore news (which includes wherever the source of a Santa Claus rally comes from, like CNBC).
With the US stock market being lackluster during this entire year, I'm wondering if there will finally be a saving grace during this month of December.
It's just that if you have any gains from sales in 2015, selling losses against them makes sense. I post this as a response to you, but also for the others just lurking. Dec 31 is a hard date that no one should ignore if they are probably going to divest something.
If you have no gains, but still could sell a loser ( a "dog" ) in 2015, if you are in the 15% bracket, it's worth $450 to harvest your losses that you can use to buy something better.
If you are in the 25% bracket, that $3k is worth $750.
If you have gains of, say $3k and can find $6 of losses then you can double the above.
Harvesting your losses and cleaning up your portfolio in essence is harvesting cash that you can put to use to buy better prospects.
( All of the above is for short-term stuff. )
be very careful with tax loss harvesting . just selling things to offset gains may be not the smartest thing to do .
when you do tax loss harvesting without really thinking things through you can end up just reducing the cost basis on the next thing you buy instead an deferring taxes and then getting hit a lot harder tax wise down the road .
this can be a real issue as you get closer and closer to taking rmd's or deciding to take social security , promotions , big raises or bonus's at work , etc . .what if tax rates rise , there is another issue ?
tax loss harvesting if not done right just kicks the tax down the road possibly to a worse time tax wise .
michael kitces took an in depth look at this
here is the summary
The bottom line, though, is simply this: tax loss harvesting does have some economic benefit over time, although it’s driven not by the outright savings (typically measured by “tax alpha”), but instead by the economic value of tax deferral, which leads to modest but non-trivial economic benefits over time. For those who may experience tax bracket changes, the benefits can be significant amplified – for better or worse – and in fact, the impact of tax bracket arbitrage can be many times more significant than the underlying benefits of tax deferral itself. As a result, it’s crucial to focus not just on the tax deferral value of loss harvesting, but also the potential tax bracket impacts… and to the extent any anticipated tax bracket changes are favorable, and there are gains to offset with the losses in the first place, harvest as much as possible, maximizing the opportunity for each contribution, each investment/asset class being held, and by “checking” for loss harvesting opportunities as often as possible!
Since I was using Betterment, they harvested my losses automatically and with the big Sept dip, that really added up, which will be helpful come tax time. Of course I'd prefer not to have losses, but if you gotta have them....
how long have you been using betterment? I'm curious about their service. how do you like it?
Just this year. Their interface is easy to use. I find I want more control over what funds I invest in and with Betterment you only control the % of stocks vs bonds. I've been transitioning over to Vanguard.
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