2 VITAL: Conversations about tax-loss harvesting.
Tax-loss harvesting demystified
Put simply, tax-loss harvesting is the process of selling investments at a loss so you can
offset gains in other investments. When implemented strategically, it has the potential to
lower your tax burden. Here's how it works:
1. You purchased an investment and its price has fallen, prompting you to consider selling.
2. The loss from this sale can be 'harvested' and used to offset current and future capital gains.
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3. Reinvest the money from the sale and buy an investment that fills a similar role in your
portfolio so you stay invested in the market.
4. Staying invested in the market can help to avoid locking in losses and helps maintain the
portfolio's desired allocation and long-term focus.
Many investors may not know
how tax-loss harvesting works or
how it's effectively implemented.
Fortunately, your advisor and SEI
have the tools to help.
Purchased telecom stock
A for $25 per share.
Sell telecom stock A for $20
per share, and realize a $5
per share loss, which is the
creation of a capital loss.
Telecom stock A
declines in price.
Throughout the year, there can be opportunities to
stay invested and harvest losses, while potentially
lowering your overall tax bill.
The power of staying invested – A simple example
Buy telecom stock B
with proceeds from loss.
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The wash sale rule prohibits an investor from taking a tax deduction if they sell an investment at a loss and
repurchase the same investment, or a substantially identical one, within 30 days before or after the sale.
