In 2009, the S&P 500 gained 23.4%, the Dow industrials gained 18.8% and the Nasdaq added 44%.
Let's see what 2010 brings. I adjusted my portfolio by selling some dogs prior to the new year.
If some of your holdings lost value in 2009, sell them by the end of the year and use the loss amount as a deduction. It first must be offset any gains you had, but excess losses up to $3,000 can be used to reduce your ordinary income so that there will be less for Uncle Sam to tax. If you have more than three grand in losses, first find a new investment advisor, then keep track of the losses as you can continue to use them up each tax year in $3,000 increments until the losses are exhausted.
What if you have gains? Although the lower capital gains rates are scheduled to remain in effect through 2010, some folks fear that the huge federal deficit might prompt Congress to up the rates sooner. If you’re worried about that, you might want to take your gains now while you’re assured they’ll be taxed at, for most folks, 15 percent.
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