Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton. Your portfolio might be due for an end-of-the-year

cleanup. The Morningstar U.S. Market Index is up about 15% through mid-November,

and overall performance has been strong for years, even after 2022's down market. That said,

some stock sectors have performed significantly better than others, and performance can vary

widely, even within a sector. And that could mean you're likely holding

some winners and some losers. Tax loss harvesting could help you trim your tax bill to save some

money. And while you're tuning up your portfolio, it could also be a good opportunity to bring

your asset allocation back into balance. Morningstar Inc.

portfolio strategist Amy Arnott is here to explain how to pull off both strategies.

It's good to see you, Amy. Good to see you too. So let's start with an explainer. What is tax

loss harvesting and how does it work? So tax loss harvesting is basically selling a stock or a fund that has

unrealized losses. And then with that loss that you realize, you can use that in a couple different

ways. You can use it to offset $3,000 in ordinary income for the current tax year. You can use it to offset $3,000 in ordinary income for the current tax year. You can use it to offset any

realized capital gains that you have for the current tax year, or you can carry it forward

indefinitely to offset future capital gains. Is a brokerage account or a retirement account better suited for tax

loss selling and why? You definitely want to be doing any tax loss selling in a taxable brokerage

account. And the reason is if you're buying and selling within something like a 401k or an IRA, there's no tax impact.

So you're not paying any capital gains.

You're just paying ordinary income tax when eventually you're selling off those assets when you're in retirement.

Now, the U.S. stock market has experienced solid growth so far in 2025.

Do up markets make it harder to spot losses?

...