This is an extremely valuable strategy for reducing taxes. When an investment has lost value, we can sell that investment and buy a similar investment. The end result of this exchange is that your portfolio has the same type of investment and you have a tax deduction that can reduce your taxes. For many investors, salary is taxed at a much higher rate than investments. Since you can typically use these losses to reduce taxes on a portion of your salary each year or reduce investment gains, they can lead to a significant tax reduction.
