How can you effectively harvest tax losses in bonds?
The prospect of higher interest rates scares a lot of investors as that can mean lower bond prices and the potential for losses. You can, however, take advantage of these losses to help improve the overall portfolio return. The simplest, most effective way to take advantage of these bond losses is by harvesting them through a “tax swap.” This involves selling an individual bond to book a loss and immediately purchasing a similar, but not identical, bond at a higher yield with the proceeds of the sale. Again, the new bond cannot be identical to the original. Wash sale […]
