This week's newsletter was written by Ryan Ermey, a senior reporter covering money and investing for CNBC Make It. You can follow him on Twitter @RyanErmey.
OpenAI's chatbot, ChatGPT, debuted in November and has quickly become a viral sensation. And having seen its capabilities — producing cogent and creative writing based on user prompts — everyone from venture capital luminaries to my buddies at the bar seem to be saying the same thing: this is about to put knowledge workers like me out of a job.
Maybe it is. After all, Microsoft announced a multiyear, multi-billion dollar investment in OpenAI this week.
So for this week's newsletter, I put the A.I. tool to the test. I tasked it with writing a financial blog post on tax-loss harvesting, a topic I chose for two reasons: 1. I recently wrote a story on the subject and 2. The rules behind the strategy haven't changed since 2021 — the last year for which ChatGPT has up-to-date information.
Here's what it produced. Keep in mind, ChatGPT warns you off the bat that it "may occasionally generate incorrect information" and "may produce harmful instructions or biased content."
Tax-loss harvesting is a strategy that investors can use to offset gains in their portfolio by selling investments that have decreased in value. This can be a beneficial way to reduce your tax bill, as it allows you to claim the losses as deductions on your taxes. However, there are some important factors to consider before deciding to pursue tax-loss harvesting.
One key consideration is whether or not the investments you are looking to sell are truly losers. If they still have potential to grow in value, it may be best to hold on to them rather than selling them just to claim a tax loss. Additionally, it's important to consider the wash-sale rule, which states that if you sell a security at a loss and then purchase the same security within 30 days, you cannot claim the loss on your taxes.
Another factor to consider is your overall investment strategy. Tax-loss harvesting can be beneficial in the short term, but it should not be the driving factor behind your investment decisions. It's important to make sure that you are making decisions based on your long-term goals and investment horizon.
In conclusion, tax-loss harvesting can be a useful strategy for reducing your tax bill, but it's important to consider the potential consequences of selling investments before making any decisions. Make sure that your investment strategy aligns with your long-term goals and that you are aware of the wash-sale rule. It's always a good idea to consult a tax professional or financial advisor before making any decisions.
