Tax loss harvesting bonds with Fidelity
Moderator: Global Moderator
Tax loss harvesting bonds with Fidelity
I have a substantial unrealized long term capital loss on my Treasuries I'm holding at Fidelity. I was thinking about selling them and immediately buying different Treasuries so I can lock in the loss and use that loss to offset any future long term capital gains. Fidelity says they charge zero commissions on Treasury sales, but I'm worried they are making a profit on some kind of hidden markup. Does anyone know how much of a hit I would take if I sold around $100,000 worth of Treasuries, for example, and then immediately purchased $100,000 in different Treasuries?
Re: Tax loss harvesting bonds with Fidelity
Look at the difference in the "bid" and the "ask". There's your answer.
So if I'm selling a T-Bill on the secondary market for example, maybe the "bid" (price I'm offered for a Bill I'm selling) is 97.503, which is 97.503 cents on the Dollar. Maybe the "ask" (the price they want to sell me a Bill for) is 98.221, or 98.221 cents on the Dollar.
The "true" market price is somewhere in the middle... so let's average them, 97.862. The damage you're getting is the difference between that estimate of fair value and your bid price, or in this TOTALLY MADE UP CASE 0.359 cents on the Dollar, or 0.359%.
I'm just making up numbers, but you will find the commission or margin they earn on Treasury trades are quite small... unless the spreads blow-out on a high-stress day. On those days... don't trade.
So if I'm selling a T-Bill on the secondary market for example, maybe the "bid" (price I'm offered for a Bill I'm selling) is 97.503, which is 97.503 cents on the Dollar. Maybe the "ask" (the price they want to sell me a Bill for) is 98.221, or 98.221 cents on the Dollar.
The "true" market price is somewhere in the middle... so let's average them, 97.862. The damage you're getting is the difference between that estimate of fair value and your bid price, or in this TOTALLY MADE UP CASE 0.359 cents on the Dollar, or 0.359%.
I'm just making up numbers, but you will find the commission or margin they earn on Treasury trades are quite small... unless the spreads blow-out on a high-stress day. On those days... don't trade.