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Yes, VTI follows the CRSP Total US stock market index and ITOT follows the S&P 1500 index.
The best way to think about tax-loss harvesting is that it is an interest free loan from the IRS. You ultimately will pay the taxes but you keep pushing it further into the future. At some point you might be able to offset the built up liability with some other offset but meantime you have free money to work with. With a little luck you push it all the way to your death bed, and then it gets wiped clean!
I know the indexes however the underlying holdings show me they have an awful lot of overlap. Your projected scenario also leaves out where tax loss harvesting hurts you as well
I don't look at it that way. Once I am up to a certain figure I am use to that amount in my statement and if it dropped lets say 30% I see it as a serious loss of money even if at one time my portfolio was 50% less.
Then you should buy and hold bonds at best, or keep your money in CDs. You are not suited for investing in the stock market. The stock market goes up and down.
I created a stock/bond fund mix that would've lost 20% in 2008 vs. 37% for the S&P 500 Index. Since then I've tweaked that and slightly increased the bond portion and plan to increase the bond exposure slowly but steadily every year.
The operative phrase here is "slowly but steadily". No big changes, just gradual moves toward being more conservative. No one knows when stocks will fall or by how much.
as i always point out 2008 was a one time freak event for many bond funds sustaining heavy losses from "safe paper " . no different than my money market went belly up and i lost some money in 2008 .
it was a situation caused by what was supposed to be safe cdo's that were marketed with a new marketing twist and failed at it . . they are long gone .
i would never judge any bond fund by 2008-2009 .
the op is banned it looks like so i would not address answers to them .
as i always point out 2008 was a one time freak event for many bond funds sustaining heavy losses from "safe paper " . no different than my money market went belly up and i lost some money in 2008 .
it was a situation caused by what was supposed to be safe cdo's that were marketed with a new marketing twist and failed at it . . they are long gone .
i would never judge any bond fund by 2008-2009 .
the op is banned it looks like so i would not address answers to them .
There is no perfect way to judge. The bond fund I use is a global bond fund, which may or may not do well in the next stock market downturn. We do the best we can with what we have. As I increase bond exposure, it's in a stable value fund.
as i always point out 2008 was a one time freak event for many bond funds sustaining heavy losses from "safe paper " . no different than my money market went belly up and i lost some money in 2008 .
it was a situation caused by what was supposed to be safe cdo's that were marketed with a new marketing twist and failed at it . . they are long gone .
i would never judge any bond fund by 2008-2009 .
the op is banned it looks like so i would not address answers to them .
Both AGG and global government bonds (including emerging market bonds as part of the index) produced flat returns from the stock market peak in October 2007 to the trough in March 2009. That's because the developed market sovereign bonds went up and cancelled out the losses from corporate bonds and emerging sovereign bonds. US treasuries went up the most but Canadian and German treasuries went up a fair bit too. So I think if the bond portion was underweighted in corporates and EM, it could go up even in a bad event like 2007-09.
I know the indexes however the underlying holdings show me they have an awful lot of overlap. Your projected scenario also leaves out where tax loss harvesting hurts you as well
According to the IRS rules on a wash sale, overlap does not matter. In fact they are even a bit vague on whether a wash sale is triggered if you use two different funds (from different vendors) that track the same index to execute the sale/buy harvest. I don't want to push it so I use two funds that track different indexes.
As far as where TLH can hurt you - if you expect your tax situation to change for the worse, for instance to go from the 15% bracket to a higher bracket, it could hurt you. Whether it does or not really depends on your circumstances. I would not use TLH unless you have a good grasp on your taxes.
Last edited by TwoByFour; 03-07-2017 at 11:19 AM..
According to the IRS rules on a wash sale, overlap does not matter. In fact they are even a bit vague on whether a wash sale is triggered if you use two different funds (from different vendors) that track the same index to execute the sale/buy harvest. I don't want to push it so I use two funds that track different indexes.
I'm not sure what the IRS definition of substantially identical but never the less I don't know that tlh has the benefit to take a chance of the IRS deeming it to be an issue
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As far as where TLH can hurt you - if you expect your tax situation to change for the worse, for instance to go from the 15% bracket to a higher bracket, it could hurt you. Whether it does or not really depends on your circumstances. I would not use TLH unless you have a good grasp on your taxes.
Well I don't know what tax rates will be next year or 10 or 30 but I do know if you take a loss and buy back in, if successful you have created a larger unrealized gain than you would otherwise have. Larger gains on their own could push your taxes and unwanted directions
This is a good quick read before anyone starts tlh
Well I don't know what tax rates will be next year or 10 or 30 but I do know if you take a loss and buy back in, if successful you have created a larger unrealized gain than you would otherwise have. Larger gains on their own could push your taxes and unwanted directions
As I said, don't TLH unless you have good grasp on your tax situation. I feel like I do, so I use it, as do a lot of other people.
Both AGG and global government bonds (including emerging market bonds as part of the index) produced flat returns from the stock market peak in October 2007 to the trough in March 2009. That's because the developed market sovereign bonds went up and cancelled out the losses from corporate bonds and emerging sovereign bonds. US treasuries went up the most but Canadian and German treasuries went up a fair bit too. So I think if the bond portion was underweighted in corporates and EM, it could go up even in a bad event like 2007-09.
many bond funds especially fidelity's were abnormally low . super conservative funds like conservative bond fund were crushed . the safe paper that turned toxic caused many skewed results from otherwise safe and conservative bond funds .
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