Which one of these would generally be considered the most rational action for a tax-paying investor?
A)Trading frequently
B)Selling their losing and holding their winning securities
C)Throwing darts to select their portfolio holdings
D)Holding a less than fully diversified portfolio of securities
E)Ignoring taxes when making investment decisions

Question

Quizplus · Accepted Answer

Selling losing securities allows for tax loss harvesting, which can offset gains and reduce taxes owed. Holding winning securities allows for potential long-term gains and avoiding short-term capital gains taxes. Trading frequently can increase transaction costs and potentially trigger short-term capital gains taxes. Throwing darts and ignoring taxes when making investment decisions are not rational actions. Holding a less than fully diversified portfolio can increase risk.

Which One of These Would Generally Be Considered the Most