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Pros and Cons of Annual Tax-Loss Harvesting



Annual tax-loss harvesting is a process undertaken by many investors at the end of every tax year. Tax-harvesting helps with reducing tax burdens. The strategy involves selling stocks, mutual funds, exchange traded funds (ETFs), and other investments carrying a loss to offset the realized gains from other investments.


Tax-harvesting may or may not be the best strategy for all investors for several reasons.



More Than Just Tax Considerations



Increased Tax Rates







Understand the Wash Sale Rule








Portfolio Rebalancing



A Bigger Tax Bill Down the Road?





Capital Gains Are Not Created Equal







Mutual Fund Distributions



Look at the Big Picture



The Bottom Line




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