If you have investments in a brokerage account, there’s an important rule you should follow — don’t check your balance every day. In fact, you shouldn’t even check your balance every week or every month.
The reason? Stock values can fluctuate based on a variety of factors. If you check your portfolio too often and see losses on the screen, you might get spooked and lock those losses in by liquidating investments when they’re down. It’s often the case that if you leave your portfolio alone to ride out downturns, it’ll recover at some point.
But even though you don’t want to check your brokerage account too often, it’s a good idea to check it before the end of the year. You may want to make one specific move that could spare you a financial headache.
Should you sell investments at a loss?
The point of investing your money is to make a profit. And you should know that the more time you give your investments to grow, the more wealth you might amass.
If you don’t have any money invested yet, click here to open a brokerage account and get started as soon as possible. Even if you start off with just $40 or $50, it’s a step in the right direction.
But sometimes, investments don’t work out. So if you have a losing stock sitting in your brokerage account, the time to sell it is now.
Stocks sold at a loss can be used to offset capital gains. So if you made money in your brokerage account this year, you’ve created a tax bill for yourself. If you sell stocks at a loss that aren’t doing well anyway, you may be able to cancel out your gain so you don’t owe the IRS extra.
But it’s not just investment gains you can cancel out by selling losing stocks. You can also use up to $3,000 in stock losses per year to offset ordinary income.
A lot of people earned a nice amount of interest this year from their savings accounts or CDs because rates were up. If that applies to you, and you didn’t pay estimated taxes on those earnings, then you may end up having to write the IRS a check this coming April. But if you sell some investments at a loss, you can potentially cancel out — or at least reduce — that tax liability.
And even if you earned $0 from your bank, you probably still earned a paycheck. You can similarly use up to $3,000 in investment losses to cancel out up to $3,000 of regular earnings.
Get moving before Dec. 31
Selling investments at a loss is a great way to lower your tax bill for 2024. But for that to happen, you need to officially take those losses before the end of the calendar year.
Don’t wait too long to give your portfolio a closer look. If you hold off, you risk getting wrapped up in holiday and year-end plans, and you might forget to make this simple but effective move. Instead, carve out an evening in late November or early December to get it done so you have one less thing to worry about.