Tax-Loss Harvesting

The goal of tax-loss harvesting is to sell positions you own that are at a loss and then repurchase similar (but not identity) positions. The benefit of doing this is that you generate losses that help offset gains for tax purposes and stay invested in the market at the same time. You get to capture the downside for taxes, but also get the upside of the market when it goes back up. 

When investing in individual stocks, tax-loss harvesting can be more difficult because the positions you purchase to replace the positions you sold may not be that similar even if they are in the same industry. They could have very different trends, management teams, products, etc. When purchasing a similar low-cost index fund, you are getting a much more similar replacement. 

If you wish to sell a position to realize the losses, but want to continue to invest in that specific company or fund, then you need to wait at least  31 calendar days before repurchase the investment so you avoid a wash sale.