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04-30-2022, 08:36 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,166
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Harvesting for tax loss
I have a investment grade bond fund (VFIDX) that I have an unrealized loss of $39,000.00 in. I want to sell it in order to reduce my tax for this year..I don't really have anything with gains that I want to sell to offset that much loss.I think it would still be wise to sell it even if all I do is get to use $3000.00 limit that I can deduct each year. My problem is I want to exchange it for something that will pay as much in dividends as this fund and not expose me to any additional risk. It is currently yielding 3.87%. Looking for suggestions on how I might proceed..Thanks..
https://investor.vanguard.com/mutual.../profile/VFIDX
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04-30-2022, 08:51 AM
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#2
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,897
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I think you mean you have a loss, not a gain.
Investigate PTIAX. Similar yield. Dropped less so far.
Watch wash sale for any recent reinvested dividend.
I tax loss exchanged a bunch in 2008. Never was really out of the market, but I milked that tax advantage all the way into 2016. So I agree with your strategy.
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04-30-2022, 08:59 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,166
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 Quote:
Originally Posted by COcheesehead
I think you mean you have a loss, not a gain.
Investigate PTIAX. Similar yield. Dropped less so far.
Watch wash sale for any recent reinvested dividend.
I tax loss exchanged a bunch in 2008. Never was really out of the market, but I milked that tax advantage all the way into 2016. So I agree with your strategy.
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Yes...I meant loss...Now corrected...Thanks!
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04-30-2022, 09:37 AM
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#4
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Recycles dryer sheets
Join Date: Jan 2022
Posts: 464
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You could consider going down a bit in duration to VFSUX. The difference in yields will cost you about $60 on a $100k investment for the month you need to be out. You might make that up in principal if NAVs continue to decline. For something different, there’s high-yield muni VWALX with a slightly lower duration and a yield of 3.4%.
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04-30-2022, 09:51 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,166
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Quote:
Originally Posted by Phroig
You could consider going down a bit in duration to VFSUX. The difference in yields will cost you about $60 on a $100k investment for the month you need to be out. You might make that up in principal if NAVs continue to decline. For something different, there’s high-yield muni VWALX with a slightly lower duration and a yield of 3.4%.
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So correct me if I'm wrong...After being out of VFIDX for 30 days I can buy it back without a penalty?
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Life is good. Then you die.
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04-30-2022, 06:17 PM
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#6
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Recycles dryer sheets
Join Date: Jan 2022
Posts: 464
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Quote:
Originally Posted by lawman
So correct me if I'm wrong...After being out of VFIDX for 30 days I can buy it back without a penalty?
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That is correct.
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05-02-2022, 11:21 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,166
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Quote:
Originally Posted by Phroig
You could consider going down a bit in duration to VFSUX. The difference in yields will cost you about $60 on a $100k investment for the month you need to be out. You might make that up in principal if NAVs continue to decline. For something different, there’s high-yield muni VWALX with a slightly lower duration and a yield of 3.4%.
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Well you can now count on interest rates to either level off or go down..I have decided to stop the bleeding and placed an order to sell my bond fund at today's closing...I am looking at a $40,000.00 loss and just can't stand to see that possibly double as I feel it could..At any rate my plan is to go into VUSFX for now. I will buy back VFIDX when I think the carnage is over..10 year treasuries are now near 3%..At least I won't be destroyed if treasuries go back to 11%. It did it once..I can't see why it can't do it again..So much for the safety of bonds..
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05-02-2022, 11:46 AM
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#8
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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Quote:
Originally Posted by lawman
So correct me if I'm wrong...After being out of VFIDX for 30 days I can buy it back without a penalty?
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If buying a different fund but the same type of fund after a tax loss, I think it is best to wait 31 days to buy again, just to make sure the 30 days are covered.
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Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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05-02-2022, 12:15 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,166
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Quote:
Originally Posted by UnrealizedPotential
If buying a different fund but the same type of fund after a tax loss, I think it is best to wait 31 days to buy again, just to make sure the 30 days are covered.
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VFIDX is an intermediate term investment grade fund.VUSFX is an ultra short term investment grade fund..Do you think those would be subject to the 30 day wash rule?
__________________
Life is good. Then you die.
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05-02-2022, 12:38 PM
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#10
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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Quote:
Originally Posted by lawman
VFIDX is an intermediate term investment grade fund.VUSFX is an ultra short term investment grade fund..Do you think those would be subject to the 30 day wash rule?
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Not sure. I would call your brokerage and ask. Or just to be on the safe side when I am unsure, I wait the 31 days and then I don't have to worry about it.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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05-02-2022, 01:25 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,166
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Quote:
Originally Posted by UnrealizedPotential
Not sure. I would call your brokerage and ask. Or just to be on the safe side when I am unsure, I wait the 31 days and then I don't have to worry about it.
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Schwab said "no problem"
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