Putting the Pieces Together to Deal with Bad Investments
Investing can be a tricky thing. If you are not careful, the value of your investment may drop and never recover. Sierra Income Corp has some advice for you to follow in case you ever get into this situation.
Sell Investments that Dropped Below Your Purchase Price – One strategy is to sell investments that have dropped below your purchase price if they are worth less than what you paid for them originally. The goal would be to buy low and sell high, but you will need to make sure that any other capital gains taxes apply before making this move.
Liquidate Investments – Another strategy is to liquidate investments that have dropped below your purchase price. This would entail selling off assets in order to make up the difference of what you are short for loss recovery. If this move is made, realize that it will lock in any capital gains taxes on those losses and may not be a viable option depending on where you stand with income tax brackets.
Increase Contributions or Purchase More Assets – A third strategy for recovering investment losses is to increase contributions into the account(s) or even just purchasing more assets within them if they are worth less than what you paid originally as well. While this might seem like an easy solution at first glance, know there could also be additional fees associated with increasing contributions or buying new assets.
Don’t Invest Further Until Recovery Is Maintained – Finally, another option for recovering investment losses is to liquidate investments in order to make up the difference of what you owe before making increased contributions or purchasing new assets. This can be a dangerous move if you are not careful though, as it may result in additional fees and tax implications while locking in any capital gains taxes on the losses that occur during this process. Be sure to consult with your financial advisor before making this decision so they can help maintain recovery rates of investment losses for optimal performance.