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Tax loss harvesting partner for VTSAX

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  • Tax loss harvesting partner for VTSAX

    Hello--I'm sort of a beginner, long-time reader, first-time poster. Can anyone suggest a good tax-loss harvesting partner for VTSAX which is:
    *not VFIAX (I have this auto-purchased in my HSA)
    *Can be purchased w/o fee in a Vanguard taxable account

    I'll appreciate any advice--and sorry in advance for the basic question.

  • #2
    VFIAX (500 index)

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    • #3
      I prefer ETFs for taxable, see ITOT or SCHB Alternately FSKAX or FZROX

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      • #4
        In addition to the suggestions already given, take a look at your other holdings in the account and ask if the ratios in your account or what you want them to be. If not, you could buy one of the other things you already hold which is under your desired asset ratio (for instance if you hold too much in domestic stock relative to international, you can use the international fund as a tax loss harvest partner for the domestic stock).

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        • #5
          Adding to the questions which OP has here:
          I am trying to do the TLH with my brokerage account at Merril Lynch and when I go to exchange my VTSAX with VFIAX or FZROX or FSKAX, I get a message that the buy fund is not eligible for an exchange and asking me to chose another fund. This is my first time doing some TLH and would love to get some loss to upset capital gains for this year

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          • #6
            ETF - expense ratio- index tracked

            SCHB- 0.03%- Dow Jones U.S. Broad Stock Market Index
            VOO- 0.03%- S&P 500
            VV- 0.04%- CRSP US Large Cap Index
            VONE- 0.08%- Russell 1000 Index

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            • #7
              Originally posted by FireFox View Post
              Adding to the questions which OP has here:
              I am trying to do the TLH with my brokerage account at Merril Lynch and when I go to exchange my VTSAX with VFIAX or FZROX or FSKAX, I get a message that the buy fund is not eligible for an exchange and asking me to chose another fund. This is my first time doing some TLH and would love to get some loss to upset capital gains for this year
              Just outright SELL your VTSAX shares, then after the sale goes through and the money is available in your settlement account use the funds to buy shares in VFIAX (or whatever other fund you wish to use as your tax-loss harvest partner). It's slightly more cumbersome, but achieves the same goal: selling shares of Fund A at a loss for tax purposes and buying additional shares of substantially different Fund B.

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              • #8
                I don’t know about other brokerages, but one nice thing about Vanguard is the ability to do a direct exchange of Vanguard index funds. It makes tax loss harvesting an easy one-step process.

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                • #9
                  Originally posted by Bmac View Post
                  I don’t know about other brokerages, but one nice thing about Vanguard is the ability to do a direct exchange of Vanguard index funds. It makes tax loss harvesting an easy one-step process.
                  Fidelity does the same with Fidelity funds. But if you want to exchange with a non-Fidelity fund it’s a two-step process, day 1 sell fund A shares, day 2 buy fund B shares with proceeds from day 1. Still fairly convenient as you only have to enter info as add-on item to the initial sale.

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                  • #10
                    Originally posted by Bmac View Post
                    I don’t know about other brokerages, but one nice thing about Vanguard is the ability to do a direct exchange of Vanguard index funds. It makes tax loss harvesting an easy one-step process.
                    I agree with you on that. My Vanguard Brokerage account makes it look so simple. I made a mistake of opening a Brokerage with ML as it was linked to my bank account with BOA. I had to pay a commision to buy the Vanguard fund in ML account which also sucks

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                    • #11
                      Originally posted by artemis View Post

                      Just outright SELL your VTSAX shares, then after the sale goes through and the money is available in your settlement account use the funds to buy shares in VFIAX (or whatever other fund you wish to use as your tax-loss harvest partner). It's slightly more cumbersome, but achieves the same goal: selling shares of Fund A at a loss for tax purposes and buying additional shares of substantially different Fund B.
                      Can you sell a mutual fund and buy an ETF for TLH purpose? I mean can I sell VTSAX and then buy VOO?

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                      • #12
                        Originally posted by FireFox View Post

                        Can you sell a mutual fund and buy an ETF for TLH purpose? I mean can I sell VTSAX and then buy VOO?
                        Yes. Tax loss harvesting is purely about selling shares (individual stocks, mutual funds, or ETFs) at a loss, and reporting the loss on your taxes for a tax credit. Buying ANYTHING afterward is optional! (But of course you are going to use the sale money to buy something, as keeping it in a money market account would be dumb.)

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                        • #13
                          Originally posted by artemis View Post

                          Yes. Tax loss harvesting is purely about selling shares (individual stocks, mutual funds, or ETFs) at a loss, and reporting the loss on your taxes for a tax credit. Buying ANYTHING afterward is optional! (But of course you are going to use the sale money to buy something, as keeping it in a money market account would be dumb.)
                          While this is certainly true, it’s a bit cavalier regarding the OP’s question, which is really what most of these TLH posts are about: What to buy to avoid a wash sale. The selling is the easy part. Choosing the appropriate partner in order to stay in the market is generally the bigger concern (or area of uncertainty).

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                          • #14
                            Originally posted by Bmac View Post
                            While this is certainly true, it’s a bit cavalier regarding the OP’s question, which is really what most of these TLH posts are about: What to buy to avoid a wash sale. The selling is the easy part.
                            Good point. But those two are different enough that a wash sale should not be an issue.

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                            • #15
                              Originally posted by Bmac View Post
                              regarding the OP’s question, which is really what most of these TLH posts are about: What to buy to avoid a wash sale.
                              If I’m reading correctly, OP is concerned that owning VFIAX in an HSA causes a wash sale. I agree with all the posters suggesting VFIAX as a viable TLH partner. The IRS revenue ruling creating the wash sale debate concluded that buying back the security in an IRA that was sold from a taxable account is a wash sale. No mention of other accounts like 401ks, HSAs, etc.

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