When your stocks go down, you don't have to hold onto them for fear of selling them and losing a lot of money. You can save quite a bit in taxes by selling at a loss.
You can deduct annually up to $3,000 of capital losses in excess of gains. Consider selling enough losers each year to offset your gains and possible arrive at an overall $3,000 loss for the year.
If you generated enough losses earlier in the year, consider selling enough winners before year-end to get back to that level. Taking these gains will not increase your current taxes.
In implementing these strategies avoid disallowed losses by watching out for the wash sales (i.e., buying the same security within 30 days before or after the sale).
NOTE: Don't let the search for tax savings lead you into bad investment decisions. Your investment goals must be your primary concern. But if a particular investment is on the sell-or-hold borderline, consider the tax consequences of the sale.
