The end of the year is the time when we all look at our tax picture to see what can be done to lower what we might owe. Harvesting capital gains, especially when we know the tax rates for capital gains most likely will be higher next year, is one approach. But think twice before you sell.

One question to ask is: “Can you afford to shrink your capital, and therefore future wealth?” The answer is to harvest your gain up to a point. Look at any investment losses you may have + $3000 of ordinary income over that loss amount.

By using this approach, you can reduce your current tax bill but not at the expense of your future.

Disclosures:http://www.hechteffect.net/?page_id=31