Harvesting Tax Losses

2009 has been another up and down year on Wall Street. This means your mutual fund is likely busy buying and selling securities internally. While the aggregate ends up in a loss for you, your 2009 tax bill may still show capital gains from the internal workings of your mutual fund company. As such, it's important to harvest investment losses to offset any possible taxable gains for 2009. It's only May, so there is no need to dial your broker as you read this. But it's never too early to familiarize yourself with the concept of harvesting losses and prepare for the 4th quarter of 2009.

Last year, Kiplinger published this excellent article detailing the loss-harvesting procedure.