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Preparing for Taxes - Time to Look at your Portfolio

Preparing for Taxes - Time to Look at your Portfolio

A number of potential tax law changes are still up in the air. For example, the capital gains rate may stay at 15% for middle-income earners, but it could very well increase to 20% for high-income earners.

Take a look at your investments before the end of the year. If you have a stock or fund that has increased significantly in value, you may decide to sell and lock in the 15% rate, just in case rates change. On the other hand, if a stock or fund is way down, you may decide to hold on to that fund until the first of the year in order to offset potentially higher tax rates. (Remember, gains can be offset by losses.)

Just don’t make investment decisions based on taxes alone. If an investment no longer makes sense, don’t hold it. If an investment still makes great sense, hang on to it, regardless of the tax implications. Tax considerations are important, but in the long run your total return makes all the difference.

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