Market Corrections - 3 Ways To Turn a Negative Into a Positive
1. Opportunities For Tax Efficiencies - consider “harvesting” realized losses to help offset taxes on future gains and income. Remember, under current tax law, realized losses can carry forward to future years if you don’t use them all this year. Don’t upset your long term asset allocation by realizing losses though. Instead, consider selling a security for the loss and then replacing it with a similar security to keep your asset allocation in line.
2. Take Advantage of Lower Interest Rates - historically, when stocks go down, so do interest rates. If applicable, consider speaking to a mortgage professional about reviewing your mortgage to see if a refinance would be beneficial to take advantage of lower interest rates.
3. Buy low, sell high - a correction may be a good time to consider adding to your current portfolio or rebalancing your portfolio back to your target allocation, selling your winners and adding to your other holdings at lower prices.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. The information in this material is for informational purposes only and is not intended to be specific advice. Please speak with your financial advisor as it pertains to your specific situation. No strategy ensures a profit or protects against a loss. There is no "right" time to enter or exit a market. There is no guarantee that the investment objective mentioned here will be met. Mortgages are not offered through LPL Financial. Please speaker to an outside mortgage professional for specific advice.