| You need to sell your stocks now. I'm not kidding. | | | | it to offset other gains in your portfolio. |
| Right now's the time to purge some stocks from | | | | Let me give you an example. |
| your portfolio. But here's the thing, you need to be | | | | Let's say you bought Citigroup (C) about 2 years |
| very selective in what you sell... and what you | | | | ago. You probably paid $50 a share for this position. |
| eventually buy. | | | | So 100 shares would cost $5,000. Right now Citigroup |
| Why now? Why the Urgency? I'll explain in a | | | | is trading for about $9 per share. If you're holding this |
| moment. | | | | stock in your portfolio you're looking at a loss of |
| But you must take action now. It's the difference | | | | $4,100. That's huge. |
| between a lot and a little money in your pocket. | | | | You can sell this position and harvest the loss. You |
| Anybody can give you a trade idea. But that's just | | | | then offset other gains you have with this loss on |
| part of the solution. Any savvy investor knows it's | | | | your tax forms. If you're in the 28% tax bracket |
| not how much money you make on a trade... It's | | | | you would pay Uncle Sam more than $1,100 on a |
| how much you get to keep. | | | | $4,100 gain. By using the tax loss offset you don't |
| As a great trader once told me - "It's only a profit if | | | | owe him anything! |
| you can spend it at Safeway." | | | | See how powerful this strategy is? |
| You can insert the grocery store of your choice into | | | | Not bad... but what do you do with the money after |
| the above statement. Despite its simplicity, the | | | | the sale? How do you reinvest the $900? |
| statement can't be more true. Just because you're | | | | We'll here's the rub... unfortunately, you can't just go |
| sitting on a gain doesn't make it a profit. | | | | buy Citigroup stock. The IRS has rules against that. |
| And don't forget, just because you have a big gain | | | | You have two other options. First you can wait 31 |
| doesn't mean you get to keep it. | | | | days or more before buying back into Citigroup. The |
| Now, don't be too confused by that statement. | | | | stock might move a bit so you might pay more or |
| What I mean is simple. Uncle Sam and all of his | | | | less for the stock - it's a risk. |
| friends in the government want their share of your | | | | The other thing you can do is buy a similar |
| profits. He's the silent partner nobody talks about. If | | | | investment. Maybe buy another bank, or buy an ETF |
| you're like me, I'm sure you pay more than your fair | | | | holding a basket of banking stocks. Just be sure the |
| share of taxes. I've paid more in taxes than I care to | | | | new purchase isn't "substantially identical" to the old |
| think about. | | | | one - that's a big "no-no" in the eyes of the IRS. |
| Just think of your tax bill every year for the last 10 | | | | Using this strategy you capture the best of both |
| years. In no time you'll see something amazing. A | | | | worlds... you harvest a loss to shelter other tax gains |
| huge portion of your hard earned dollars went right | | | | and you continue your exposure to the industry. |
| to the government. | | | | Now here's a silver lining to a very dark cloud. If you |
| Here's the nice part about our tax system (if there is | | | | have more losses in your trading account than |
| one). As citizens, it's perfectly legal to take any | | | | profits, don't worry. Any losses can be carried |
| action to reduce our tax bill. | | | | forward offsetting future gains. |
| That's why selling stocks NOW is so important. | | | | As a matter of fact, I know an investor holding more |
| It's a process called tax loss selling. Before we go any | | | | than $100,000 in "harvested" losses. I know it sounds |
| further let me say this: I'm not a tax advisor, | | | | crazy, but he's optimistic those losses will offset gains |
| accountant, or tax attorney. I do some of this in my | | | | well into the future. |
| own account, but please consult a professional for | | | | Don't forget, this strategy doesn't last forever. You |
| more information. | | | | need to sell your securities before the end of the |
| Enough with the legal mumbo jumbo. | | | | year to reduce your 2008 taxes. Take action now. |
| What is tax loss selling? It's a simple process of selling | | | | Don't miss this opportunity to improve your overall |
| stock showing a loss. You "harvest" this loss and use | | | | returns. |