It often seems that it's easier to ask for a divorce than to get rid of the losers in your investment portfolio.
Especially since 40-50% of marriages end in divorce while so many investors stay married to their portfolios.
But much like a bad date, you need to cut your losses and move on.
And do it before the end of the year. Because tax loss selling, along with some other portfolio tactics, can save you tons of money.
And you'll need it if you're paying alimony.
Dump the Losers
This is so hard for so many people.
Because they get emotionally attached.
"Capital losses actually can help your tax situation, especially if you have gains," says Dominic Tavella, founder and president of Diversified Private Wealth Advisors.
As a refresher, a capital loss is generated when you sell any investment, like a stock or share of a mutual fund, for less than you bought it. But you can't deduct unlimited losses on your tax return. You only can take a maximum loss of $3,000 each year. So if your total net capital losses are $10,000, the remaining $7,000 can be carried forward and offset again any future gains.
"You want to minimize your gains and maximize your losses," says Jackie Perlman, principal tax research analyst at H&R Block.
So if you have gains, go find some losses.
And if you're struggling to divorce yourself from your loser holding, know that you can sell it and buy it back - in a month.