Op-Ed: When investing, it's not just how much you make, it's also what you keep after taxes
The first part is through tax-loss harvesting. This strategy is when you sell all or some of your investment holdings at a loss concurrent with an offsetting sale of all or some positions with roughly an equal amount gain. The net effect is creating cash without triggering much of a tax gain or loss, and this cash can be redeployed into tax-efficient holdings, thus creating a more tax-smart non-retirement portfolio.
Oftentimes, your account statement will report an average cost basis of these tax lots, but your taxable account's cost basis information can be converted to show the cost basis for each tax lot. Waiting for markets to recover could mean that the tax-loss harvesting opportunities that were available during a market maelstrom may no longer be available, and you may have to pay capital gains taxes to sell all or part of a tax-inefficient holding to reinvest in a tax-smart holding.
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