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- Joined
- Jun 25, 2005
- Messages
- 10,252
The setup:
My mom passed away earlier this summer and I received a small windfall. Not enough to buy a car, but something nevertheless.
So I have this cash in taxable that is burning a hole in my pocket. And I own shares of the emerging markets index (VWO) in both taxable and tax-advantaged accounts. VWO turns out to be rather tax-efficient and presents tax-loss harvesting opportunities from time to time.
So on Monday, ....
I intend to sell VWO in tax-deferred IRA and buy the same number of shares of VWO in taxable. That way, if VWO drops because of Federal budget stuff, I can just tax-loss harvest it eventually. The proceeds from selling in tax-deferred will just stay in cash until I see what happens this week in Washington, DC.
The change to the current portfolio because of this "double" exchange is no change at all, but now cash is in tax-deferred instead of in taxable. However, it preserves tax-deferred space and allows for some tax-timing due to TLH. OTOH, if stocks go up, VWO is tax-efficient, so is not a bad thing to have in taxable. Also VWO just paid its quarterly dividend, so I will not be buying the dividend. It seems like a win-win to me.
The questions:
Does this make sense and do you think it is worth it?
Bonus: What do you think will happen this week in the stock market and why?
Thanks for any insights!
My mom passed away earlier this summer and I received a small windfall. Not enough to buy a car, but something nevertheless.
So I have this cash in taxable that is burning a hole in my pocket. And I own shares of the emerging markets index (VWO) in both taxable and tax-advantaged accounts. VWO turns out to be rather tax-efficient and presents tax-loss harvesting opportunities from time to time.
So on Monday, ....
I intend to sell VWO in tax-deferred IRA and buy the same number of shares of VWO in taxable. That way, if VWO drops because of Federal budget stuff, I can just tax-loss harvest it eventually. The proceeds from selling in tax-deferred will just stay in cash until I see what happens this week in Washington, DC.
The change to the current portfolio because of this "double" exchange is no change at all, but now cash is in tax-deferred instead of in taxable. However, it preserves tax-deferred space and allows for some tax-timing due to TLH. OTOH, if stocks go up, VWO is tax-efficient, so is not a bad thing to have in taxable. Also VWO just paid its quarterly dividend, so I will not be buying the dividend. It seems like a win-win to me.
The questions:
Does this make sense and do you think it is worth it?
Bonus: What do you think will happen this week in the stock market and why?
Thanks for any insights!