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Investing Specialists

Tax-Gain Harvesting Can Be a Valuable Strategy for New Retirees

Here's a way to reposition your taxable account while also decreasing your tax burden down the line.


Tax-loss selling is often touted as a worthwhile year-end tax planning strategy. But as 2017 winds down, most investors who go out looking for meaningful losing positions in their taxable portfolios will come up empty-handed.

Through early December, all but three mutual fund categories are in the black thus far this year. (If you're curious, the losers are bear market, equity energy, and equity limited partnership funds.) Individual stock investors might more readily be able to pick off losing positions to generate a tax loss, but even they might struggle to find critical mass: Just 71 of more than 1,500 large-cap companies in Morningstar's database have lost more than 10% of their value so far this year. Even though strong appreciation in the equity market, combined with another tough season for mutual fund capital gain distributions, means that investors could really benefit from tax losses in their portfolios, losers are hard to find.

Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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