As the leaves change and the year winds down, now is the perfect time to refresh your financial strategy. Just like a "financial fall cleaning," tax-loss harvesting can help you end the year strong and start the next on a firmer ground.

Why Consider Tax-Loss Harvesting This Fall?

Tax-loss harvesting allows you to sell investments at a loss to offset gains, reducing your tax bill. For example, imagine a $5,000 gain from Stock A and a $4,000 loss from Stock B. This strategy can turn setbacks into tax savings, as losses greater than gains can decrease your regular income by up to $3,000 and be carried forward to future years.

Benefits of Tax-Loss Harvesting

Reduce Your Tax Bill: Lower capital gains and potentially reduce regular income taxes.

Turn Setbacks Into Tax Savings: Use investment losses for tax benefits.

Clear Out the Clutter: Align investments with your financial goals, just like a fall clean-up.

Potential Pitfalls to Watch Out For

Wash Sale Rule: Avoid repurchasing a similar stock within 30 days, which could nullify the loss.

Limited Benefits: If your gains are low or you're in a lower tax bracket, the impact might be smaller.

Emotional Investing Risks: Don't hold underperformers out of hope; focus on strategy instead.

Remember, tax-loss harvesting isn't one-size-fits-all. It's most effective when aligned with your financial goals. Review your portfolio before year-end and seek professional advice. Connect with us for a personalized review to make the most of your strategy.