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Vanguard fund choices and Tax Loss harvesting

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  • Vanguard fund choices and Tax Loss harvesting

    Hello,

    This is in regards to my taxable brokerage account.

    I sold my VTSAX (VG total stock market admiral shares) on 2/25/22 for TLH and exchanged them for VLCAX (VG large cap admiral shares). Now i see that i have more loss on the VLCAX and wanted to capture these as well. My questions are,

    1. I plan on exchanging VLCAX for VTSAX, now, since it is > 2 months. Is there any problem with this ?. None of my other tax deferred or taxable account have VTSAX or VLCAX (they are all S&P 500 funds)
    2. Based on the investable amount, i see that now i am eligible for institutional shares of the total stock market (VITSX). Is there any reason i should stick with admiral shares and not go to institutional ?
    3. Is there a particular day of the month when i should do this ?
    4. Should i re-invest dividends automatically or should i do this on a fixed time ? looks like it does not make a big difference for TLH; would this cause a tax drag one way or the other ?
    4. Both VTI (ETF) and VITSX have the same expense ratio. Is one preferred over the other ? i read WCI's post on MF vs ETF and he ultimately said depends on cost and hassle. But looks like the costs are the same for both.

    Thanks for everyone's insight.

  • #2
    You don't want your funds to automatically reinvest. For example if you still held a position in VTSAX and there was a dividend 30 days after 2/25 then it would have been a wash sale.

    I prefer ETFs over mutual funds for a brokerage account. You can sell/buy ETFs during the day.

    Comment


    • #3
      Originally posted by Shankar1415 View Post
      Hello,
      1. I plan on exchanging VLCAX for VTSAX, now, since it is > 2 months. Is there any problem with this ?. None of my other tax deferred or taxable account have VTSAX or VLCAX (they are all S&P 500 funds)
      - no problem
      2. Based on the investable amount, i see that now i am eligible for institutional shares of the total stock market (VITSX). Is there any reason i should stick with admiral shares and not go to institutional ?
      - no reason
      3. Is there a particular day of the month when i should do this ?
      - no day
      4. Should i re-invest dividends automatically or should i do this on a fixed time ? looks like it does not make a big difference for TLH; would this cause a tax drag one way or the other ?
      - as noted, do not auto-invest in taxable if you want to TLH. Assuming you are making periodic investments or are TLH you will not miss investing the dividends for long
      4. Both VTI (ETF) and VITSX have the same expense ratio. Is one preferred over the other ? i read WCI's post on MF vs ETF and he ultimately said depends on cost and hassle. But looks like the costs are the same for both.
      - as noted, I also prefer ETFs in taxable
      .

      Comment


      • #4
        Originally posted by zlandar View Post
        You don't want your funds to automatically reinvest. For example if you still held a position in VTSAX and there was a dividend 30 days after 2/25 then it would have been a wash sale.

        I prefer ETFs over mutual funds for a brokerage account. You can sell/buy ETFs during the day.
        Thank you both. I am a little confused about the auto re-invest. If my only holding in a brokerage account is VLCAX which i have set up as auto re-invest dividends; then when i TLH by exchanging the entire holding to VTSAX and now auto re-invest dividends to VTSAX. How does auto-re-investing affect my TLH ability ?

        Is there any other reason to prefer ETF in taxable other than the ability to buy during the day.

        Comment


        • #5
          Originally posted by Shankar1415 View Post

          Thank you both. I am a little confused about the auto re-invest. If my only holding in a brokerage account is VLCAX which i have set up as auto re-invest dividends; then when i TLH by exchanging the entire holding to VTSAX and now auto re-invest dividends to VTSAX. How does auto-re-investing affect my TLH ability ?

          Is there any other reason to prefer ETF in taxable other than the ability to buy during the day.
          Because you will eventually own lots of ETF/MF of differing cost basis. When you start a brokerage account it's simple: sell 100%. Buy 100%.

          Think about what happens after several years. Say you purchased VTSAX over the next 5 years. Each purchase will be at a different cost basis. When you TLH you will not be selling all your VTSAX; just the lots which have are worth less than what you paid for them.

          Those remaining shares of VTSAX can cause you to inadvertently purchase VTSAX if the dividend happened to occur within 30 days of your TLH.

          Comment

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