Tax Loss Harvesting
Tax Loss Harvesting is a strategy used by investors to reduce their tax liability. It involves selling investments that have lost value to offset gains from other investments. By realizing these losses, investors can lower their taxable income, which may result in a smaller tax bill.
This technique is particularly useful at the end of the year when investors review their portfolios. However, it's important to be aware of the Wash Sale Rule, which prevents investors from claiming a loss if they repurchase the same or a substantially identical investment within 30 days.