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  • question re tax loss harvesting

    i am confused after reading a post on tax loss harvesting. I thought when encountering a loss (like in current environment), we should HOLD the asset as it likely will increase in value after this time period. how does tax loss harvesting play into this? Thanks!

  • #2
    Tax loss harvesting just allows you a means to deduct some of the losses from your taxes (currently $3k per year). Not everyone does it, however.

    The basic idea is that you can sell your losers in a taxable account and buy a similar enough fund to experience the same growth over time, while also being able to deduct the losses that you experienced. So you can kind of get the best of both worlds.

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    • #3
      Originally posted by EthanAllen View Post
      i am confused after reading a post on tax loss harvesting. I thought when encountering a loss (like in current environment), we should HOLD the asset as it likely will increase in value after this time period. how does tax loss harvesting play into this? Thanks!
      its the second free lunch, after diversification.

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