Don’t Rule Out Tax-Loss Selling as 2023 Winds Down

Investors’ best tax-loss candidates may actually be their bond holdings. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=49902&elqTrackId=ddaa39213fca4889ae102f6b9b028bc5&elq=152354c06f044939a576b63dd7e8dae1&elqaid=49902&elqat=1&elqCampaignId=24945) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] The U.S. market gained more than 15% for the year to date through mid-November. That’s a healthy showing by any measure. It doesn’t seem like it would be a market environment that’s conducive to tax-loss selling. But unless your strategy is to buy the whole market (or as Bogleheads say, “[VTSAX]( and chill”), you may indeed have opportunities to realize tax losses in your portfolio, which you can use to offset gains elsewhere. That’s because a fairly small cluster of stocks has led the market’s upward trajectory, while other market segments haven’t performed nearly as well. One surprising place to look for tax-loss sale candidates may be your bond holdings, which experienced a rout in 2022. Recently acquired positions, especially long-term and even intermediate-term bonds and bond funds, are especially ripe for the picking, because your cost basis may well be above the current share price. If you have taxable bonds in your taxable account, you could think of tax-loss selling as part of a broader portfolio cleanup project, lassoing taxable losses and also improving your portfolio’s “asset location.” (Generally speaking, bonds are a better fit for a tax-sheltered account.) In this article, I rounded up [some of the best places to look for tax-loss candidates this year](. Given that many mutual funds are planning to make taxable distributions again in 2023, those losses could come in handy. [Analyst Stephen Welch has been documenting anticipated payouts]( from some of the big firms. [I recently sat down with Susan Dziubinski]( to discuss the three potential courses of action that investors can take if one of their holdings is about to make a big payout. Finally, John Rekenthaler followed up [last week’s retirement income research launch]( with a closer look at [talk show host Dave Ramsey’s assertion]( that retirees can safely spend 8% of their portfolios per year. Supported by lots of data, John concludes that an 8% withdrawal rate would have been doable over more than half of the 30-year periods in modern market history. But 8% would have been way too high in other market environments, causing a retiree to plow through her funds in 15 years or even fewer. My bias is to start retirement withdrawals conservatively, knowing that you can always adjust upward if market performance is strong in the first several years of your retirement. If it’s not, you’ve protected the longevity of your assets by being conservative. With warm regards, Christine Benz [Don’t Rule Out Tax-Loss Selling as 2023 Winds Down]( Despite strong gains for the broad market, investors may find tax losses in their equity and bond portfolios. [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [Which Popular Funds Could Hand Their Shareholders Big Tax Bills?]( A handful of Vanguard strategies will distribute more than 5% in gains in December. [Read More]( [How to Manage Capital Gains Distributions From Your Funds in 2023]( 5 takeaways for investors who own funds in taxable accounts. [Read More]( [The Good News on Safe Withdrawal Rates]( Our annual study suggests that new retirees can spend more from their portfolios. [Read More]( [An 8% Retirement Withdrawal Rate?]( There’s little room for error. [Read More]( [Must-Knows About Employee Stock Options]( How to balance the tax and investment considerations. [Read More]( [Tiffany Aliche: Helping People ‘Move Past the Shame’]( The author and ‘Budgetnista’ discusses the benefits of sharing financial mistakes, helping loved ones be better with money, and what she means by ‘financial wholeness.’ [Read More]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2023 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602