As 2024 comes to a close, investors are weighing their options to minimize taxes and maximize returns. One strategy gaining attention is tax-loss harvesting, which involves selling losing stock positions before the end of the year to offset realized gains on other investments.
While it may seem counterintuitive to lose money in order to avoid paying taxes, tax-loss harvesting can provide a significant benefit for investors. The IRS allows capital-loss carry-overs to offset subsequent years’ gains, but there’s an annual limit of $3,000. Selling losing positions earlier rather than later can help investors offset more capital gains and reduce their tax liability.
In the tech sector, some stocks performed better than others in 2024. Nvidia Corp.’s stock soared 182.6% for the year, while MicroStrategy Inc.’s stock jumped 440%. However, these high-flying stocks also come with risks, including net losses and volatility. Coinbase Global Inc.’s stock, on the other hand, rose 58% for the year, driven by strong profits and investor enthusiasm.
Investors should also consider Treasury Inflation Protection Securities (TIPS), which can provide comfort in inflationary environments but come with tax implications. With interest rates rising, investors must weigh the benefits of TIPS against their potential tax burdens.
As the market looks ahead to 2025, investors are advised to consider practical advice on managing student debt during President-elect Donald Trump’s second term.
Source: https://finance.yahoo.com/news/investing-pros-think-stock-market-105700160.html