Americans have lost billions of dollars from their retirement funds in the past year as some of the most popular recent investments have come crashing down to earth.
Will the future be brighter? Possibly. Futuristic “growth” stocks that have fallen 70% or more from their peaks are, by definition, closer to the bottom than they are to the top . The hot money that flooded in has flooded out. Some of these stocks may prove good long-term bets from here, though good luck getting the names or the timing right.
The second is that you have to watch out for the so-called “wash rule.” This means that if you want to claim a tax loss, you cannot just sell the securities and then immediately buy them back again. If you did that, the IRS would consider the transaction a “wash” and you wouldn’t get the tax benefit.
If you hold the securities in a traditional, “pretax” IRA, and you were hoping to convert this account to a posttax Roth IRA at some point, this could be the moment.
BrettArends short her
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