Should you sell your stock?

You need to sell your stock now. I'm not kidding. It is time to clear some stocks from your portfolio. But here's something that you need to be very selective about what you're selling … and you end up buying

Why Now? Why emergency? I'll explain in a moment

But you have to take action.

Anyone can give you a trading idea. But this is only part of the solution. Any savvy investor knows that this is not how much you make on the trade … this is how much you want to keep

As a great trader once told me – "It's just a profit if you can Spending on Safeway. "

You can insert the above statement into your chosen grocery store. Despite its simplicity, the statement can not be more real.

Now, do not be too confused by the statement

I do not forget that just because you have a huge income does not mean you can keep it in the interest

The meaning is simple. Uncle Sam and all his friends in the government want their share of your profits. He is the silence partner that nobody talks about. If you're like me, I'm sure you're paying a fair price for taxes than you.

For the past 10 years, consider your tax bill every year. At any time, you will see amazing things.

This is a good part of our tax system (if any).

This is why the sale of stocks is now is so important

This is a process known as a tax loss.

This is a process known as tax losses. Before we go any further, let me say: I am not a tax adviser, accountant or tax attorney. I did a bit in my account, but check with a professional for more information.

Enough Legal Mumbo Giant [1​​9459002]

What is the Tax Loss Sale? This is a simple sale of the stock showing the loss of the process. Assuming you bought Citigroup (C) two years ago, you can "harvest" the loss and use it to offset the losses in your portfolio.

Other income. You may have paid $ 50 for this job. As a result, 100 shares will cost $ 5,000. Citigroup is now trading at about $ 9 per share. If you take this stock in your portfolio, you see a loss of $ 4,100. This is huge

You can sell this post and reap the loss. You then offset the other gains on your tax form for this loss. If you are in the 28% tax rate, you will pay Uncle Sam over $ 1,100 for $ 4,100 in revenue.

Yes, but what have you done? After-sale money? How do you reinvest $ 900?

We'll be here to rub … Unfortunately, you can not just buy Citigroup stock. The IRS has rules. You have two other options. First, you can wait 31 days or more to get back to Citigroup. Stocks may move a little, so you may pay more or less for stocks – it's a risk

Another thing you can do is buy a similar investment. May buy another bank, or buy an ETF holding a basket of bank shares. Just make sure the new purchase is not "basically the same" old – it's a big "no, no" in the eyes of IRS.

Using this strategy, you capture the best of both worlds.

Now here is a silver lining, with a very dark cloud. If your trading account losses more than profits, do not worry. Any loss can be carried forward to offset future gains

In fact, I know that an investor holds a "harvest" loss of more than $ 100,000. I know it sounds crazy, but he is optimistic that these losses will offset future gains

Do not forget that this strategy will not last forever. You need to sell your securities before the end of the year to reduce your 2008 tax. Take action now. Do not miss this opportunity to improve your overall return