Selling an investment is tough. We hate to part with our beloved winners, hoping they’ll keep going up. And dumping a loser means admitting you made a mistake. Psychologically, it’s easier to wait for a rebound.

But deciding when to sell a stock, bond or mutual fund is just as important as deciding when to buy. Moreover, choosing whether to sell before the end of the year, or after, can affect your tax bill.

Since no one can know for sure what any investment will do in the future, there’s no foolproof way to decide whether any particular investment should be sold or held longer.

But you can start by clearing away psychological clutter. It doesn’t matter whether an investment has won or lost in the past — only what you think it will do in the future.

Hence, a big winner can be a candidate for sale if you think its run is over, while a loser should stay in your portfolio if you think — for a good reason — that it will rise.

So ask: If I had some loose cash, would I buy this investment today, regardless of what it’s done before? If the answer’s yes, keep it; if not, sell.

Investment decisions should never be driven by tax issues. But if you do have an investment to sell, you might as well get the most out of the rules.

The tax return you file next April will include calculations of profits and losses realized during 2004.

Profits are taxed at income tax rates if the investment was owned for 12 months or less. Those rates run from 10 percent to 35 percent — most investors are in the 15 percent to 33 percent range.

Profits on investments owned longer than 12 months are taxed at the long-term capital gains rate, 15 percent for most of us.

Total losses on all investments sold in the calendar year are subtracted from total profits to figure what is taxable. Hence, selling losers reduces the taxes you’ll pay on winners.

If losses exceed profits, up to $3,000 in loss can be used to reduce your taxable income, cutting your income tax. Additional losses can be used to offset profits and income in the future.

If you’re going to have taxable profits on an investment owned for less than 12 months, holding the sale off until a full year has passed can earn you a lower tax rate. But don’t do that if the investment is likely to fall in value while you wait.

Investors — big shots and ordinary folk — face the sell-or-hold decision. If you’ve got losers, now’s the time to think about what to do with them.