When it comes to tax loss harvesting what is your particular way you do it?
Do you wait until an assest goes down 10% 15%? Do you use a set tax loss harvest band?
and what do you switch to:
feed back on the following examples would also be appreciated: Stocks,Bonds and Gold
Sell VTI and buy VV and buy VTI back after 30 days
Sell TLT and buy VGLT and buy back TLT after 30 days
Sell GTU and buy GLD and switch back to GTU after 30 days
all feedback would be most appreciated
Tax loss harvesting, (for the taxable investors) what do you use?
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Tax loss harvesting, (for the taxable investors) what do you use?
Last edited by steve on Sat Jan 08, 2011 9:52 pm, edited 1 time in total.
Re: Tax loss harvesting, (for the taxable investors) what do you use?
Tax loss harvesting does not happen too often so I have not formalized it too much. However if I have an asset that is 10% or more in a real loss then I may consider harvesting it before it hits a rebalancing band. The reason I choose a 10% or more loss is because it's unlikely that the asset will rebound by 10% in the 31 days I'm out of it in the market. This is just my gut feeling by watching the markets over the years.
I generally don't swap to another fund because I don't want to be in a situation where some slight gains are realized and I'm now stuck with a fund with gains that I don't want to hold for the very long run (many years). So I'm a 31 day waiting person. It's a coin flip whether it helps or hurts you. The past several years I've had the chance to tax loss harvest (in 2008 and 2009). In 2008 the 31 day wait helped as the market was still falling the entire time when I harvested losses before the end of the year for tax reasons. In 2009 the 31 days was not a help as the market recovered somewhat during the Spring when I was in another stock tax loss harvest (stock market was still falling January to March that year).
In the end, these decisions probably come out in the wash. There is no "good" way to know what will happen. It could be just as likely that you swap into a fund and keep taking on losses in the new swap. In that case the 31 day wait would have been a benefit. You just don't know. I do know however that if you have a chance to tax loss harvest it is generally a good idea to do so. The losses I took in 2008 in the stocks I applied against the gains I took that year by selling down the LT bonds which spiked in price. In 2009 I banked some more losses early in the year and now have those losses to apply against the stock gains that also happened since then.
And obviously if an asset falls to 15% and is not in the red with a loss I wouldn't sell it to tax loss harvest because there is no loss to harvest. The above is simply when the rare situation presents itself to cushion the blow from a loss and sharing the pain with Uncle Sam.
I generally don't swap to another fund because I don't want to be in a situation where some slight gains are realized and I'm now stuck with a fund with gains that I don't want to hold for the very long run (many years). So I'm a 31 day waiting person. It's a coin flip whether it helps or hurts you. The past several years I've had the chance to tax loss harvest (in 2008 and 2009). In 2008 the 31 day wait helped as the market was still falling the entire time when I harvested losses before the end of the year for tax reasons. In 2009 the 31 days was not a help as the market recovered somewhat during the Spring when I was in another stock tax loss harvest (stock market was still falling January to March that year).
In the end, these decisions probably come out in the wash. There is no "good" way to know what will happen. It could be just as likely that you swap into a fund and keep taking on losses in the new swap. In that case the 31 day wait would have been a benefit. You just don't know. I do know however that if you have a chance to tax loss harvest it is generally a good idea to do so. The losses I took in 2008 in the stocks I applied against the gains I took that year by selling down the LT bonds which spiked in price. In 2009 I banked some more losses early in the year and now have those losses to apply against the stock gains that also happened since then.
And obviously if an asset falls to 15% and is not in the red with a loss I wouldn't sell it to tax loss harvest because there is no loss to harvest. The above is simply when the rare situation presents itself to cushion the blow from a loss and sharing the pain with Uncle Sam.
Last edited by craigr on Tue Jul 27, 2010 12:21 pm, edited 1 time in total.