bpdulog

The goal is to diversify so the risk is spread over a larger number of stocks ( and hence the risk is lower)

Unfortunately the basis for the concentrated holding is low , so inevitably you'll owe higher taxes than for a normal basis stock. So you have to find ways to mitigate this and pay less taxes to the government

Capital Gains generated by selling out of the holding of the low-basis stock ( which is the goal ) can be offset against any capital losses in the completion portfolio. So your tax bill is not as high as when all the money was invested solely in the concentrated low-basis stock holdings, with the sold amounts in cash

With the tax write-offs on the capital losses , you can diversify even further reducing risk further and achieving your goal of eventual full diversification quicker



Edited 1 time(s). Last edit at Tuesday, May 10, 2011 at 09:06AM by janakisri.