3 of 21
BACK NEXT
3. Harvest some tax write-offs
You're probably seeing a lot of minus signs in your brokerage statement these days. Try not to think of them as harbingers of ruin. Instead, see them for what Uncle Sam has made them: valuable tax write-offs.

If you sell stocks, bonds or funds in taxable accounts for less than you paid, you can subtract the loss from gains elsewhere in your portfolio. If you have more losses than gains, you can write off up to $3,000 of the excess against ordinary income.

But wait: Hasn't Money Magazine been urging you to stick to your guns and not sell in this market? Good catch! That advice doesn't apply, however, to what's called a tax swap. In it you sell a losing fund and reinvest the proceeds in a similar one. You save a few grand in taxes but stay invested pretty much as you were so you're ready for a rebound.

The goal is to find a close match to the fund you're selling - but one that isn't what the IRS deems "substantially identical." Buy an "identical" investment within 30 days of the sale - before or after - and the IRS disallows the tax break. Thus swapping the Vanguard 500 Index for the Fidelity Spartan 500 Index is out.

However, trading the Vanguard 500 for the Vanguard Total Stock Market Index, which tracks a different index, is perfectly fine - as are the sample pairings above. To find a swap mate, go to our Fund Screener and look for a no-load fund in the same category. (You don't want sales charges to reduce your tax savings.) Maybe you'll find a cheaper fund with a better record than the one you're selling. If so, keep it. If not, you can always buy the old one back in 31 days.

NEXT: Turn off CNBC

Last updated August 16 2008: 4:37 PM ET
More Galleries
Beyond Russia: Geopolitical hot spots in 2015 Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More
These 20 antique guns could fetch big bucks Morphy Auctions in Pennsylvania is putting nearly 1,000 old guns on the block. Here are just a few. More
15 execs who make more than their CEOs Sure, corporate chiefs' pay often is eye-poppingly high. But at some companies, executives lower down the ladder quietly out-earned their CEO bosses. More

Special Offer

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.