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Simplifying my taxable holdings -- help!
Old 03-26-2020, 11:57 AM   #1
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Simplifying my taxable holdings -- help!

I would like to use this current market situation to do a desperately needed simplification of the taxable portion of my portfolio.

My taxable accounts (51% of my total portfolio) have the unruly and disheveled composition shown below. My overall target asset allocation is serendipitously 50/50. I want reduce the overall number of holdings to simplify future management and rebalancing.

Items shown in red are ripe for loss harvesting. I have four domestic stock ETFs because of bad advice from a Vanguard advisor, who five years ago urged me to buy 11 funds to mimic one of their standard portfolios. The Wellesley was inherited. CVX and MMM are sentimental holdings.
VG Balanced Idx Fund Adm Shares ..... VBIAX ........ 1.42%
VG Tax-Managed Bal Fund Adm ......... VTMFX .........1.07%
VG Wellesley Adm ........................... VWIAX .........7.07%
VG Total Stock ETF ........................... VTI .......... 27.28%
VG Value ETF ..................... ............. VTV ........... 6.93%
VG Growth ETF ................................ VUG ......... 34.22%
VG Extended Market ETF .................... VXF ........... 7.92%
VG Total Int'l Stock ETF .................... VXUS ........ 11.75%
Chevron ......................................... CVX ............ 1.59%
3M ................................................ MMM ........... 0.75%
My thought is to eliminate the holdings in VWIAX, and VXF or VTV and use the proceeds to top up VXUS (int'l stocks are below my target 25% of stocks) but that might not be wise right now. Or use the harvested losses to eliminate VBIAX and VTMFX for simplicity, and pick those up in my tax-deferred accounts.

Holding VTI, VTV, VUG and VXF is overkill -- there is a lot of overlap. I'm not sure of what a good combination/proportion would be, so I need to learn more about that.

Thoughts on how to clean up and simplify my taxable holdings would be most welcome.

Also, suggestions/URLs for reading on portfolio composition and tax efficiency would be great as I continue to educate myself.
I've started by reading https://www.bogleheads.org/wiki/Tax-...fund_placement

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Old 03-26-2020, 12:05 PM   #2
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If you want 50/50 allocation, the easy solution is to sell what you have (except the Wellesley), might be some nice tax loss harvesting opportunities, and then purchase more Wellesley and Wellington funds so you end up with 50% in each after. Since you are mixing 60/40 and 40/60 nominal allocation funds, the result will give you 50/50 allocation.
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Old 03-26-2020, 12:12 PM   #3
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Sell all the loser and as many of the winners as you can tax wise. Put all that money in VG Tax-Managed Bal Fund Adm since it is 50/50 I don't you dollar amounts but it looks like that is a way to get 7 things into one.
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Old 03-26-2020, 12:13 PM   #4
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But do the moves that y'all have suggested make sense tax-wise? I thought I might be best advised to put the stocks all in the taxable account, and the bonds in the tax-deferred accounts? I want to reduce my tax liability if possible.

What I have discussed above is only the taxable (brokerage) portion of my portfolio.


My reading has pointed me to thinking more along the lines of a Coffeehouse or couchpotato portfolio....
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Old 03-26-2020, 12:20 PM   #5
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But do the moves that y'all have suggested make sense tax-wise? I thought I might be best advised to put the stocks all in the taxable account, and the bonds in the tax-deferred accounts? I want to reduce my tax liability if possible.


My reading has pointed me to thinking more along the lines of a Coffeehouse or couchpotato portfolio....
In that case use a three fund portfolio with only bonds in tax-deferred if you can space wise. Look up three fund portfolio. Try to keep only total stock/total international in taxable. Click on the 60/40 and 40/60 you can make something in the middle to get 50/50 https://www.bogleheads.org/blog/2019...o-2018-update/
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Old 03-26-2020, 12:32 PM   #6
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That is a bit more along the lines of what I am thinking, but more than three funds -- perhaps 5-8 funds. I now have my afternoon reading, learning about total international bond funds, etc.

If I hold more than one domestic stock fund in addition to VTI, i also need to research what it should be. Value? Extended?

Good thing I have plenty of time "sheltered in place" to read.
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Old 03-26-2020, 12:33 PM   #7
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What I would do is sell all the losers and the two balanced funds and park the money in VMMXX. Then the next day and log in and go to My Accounts/Cost Basis/Realized gains & losses and take note of what your YTD net losses for your taxable accounts are. Then sell as much VUG as you can to eliminate the losses... as you are selling it will tell you what your estimated gain is... and park those proceeds in VMMXX. The idea is to crystalize all the losses and then sell off any gainers that are not things you want to keep long run and let the losses offset the gains.

I'm guessing that after your are done that you will be left with VTI, CVX, MMM and perhaps a little VUG.

If you want international stocks, then buy 25% of VEU instead of VXUS... VEU are not substantially identical so buying it won't queer your tax loss from selling VXUS... but they are pretty similiar.

Then use whatever is left in VMMXX to buy more VTI.

At the end of the days you would end up with no tax on the restructuring and probably 5 tickers.... your basics of VEU and VTI for international and domestic equities, respectively.... perhaps some residual leftover VUG... and your sentimental holdings of CVX and MMM.

If after 31 days VEU has a net loss or negligible gain you can swap it out for VTI if you decide that you prefer VTI.
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Old 03-26-2020, 12:42 PM   #8
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Thank you. This is exactly the sort of advice that I am seeking. But why sell off VUG and buy VTI? Because VUG is riskier, so it would be a good way to eat up the realized cap losses?
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Old 03-26-2020, 12:57 PM   #9
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One more question. If I harvest a loss in Account #1 at, say Vanguard, can I use that loss to offset a harvested gain in Account #2 at, say, Schwab?


That is, the balancing of loss vs gain doesn't have to be within one account at one instutition?
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Old 03-26-2020, 01:05 PM   #10
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VG Balanced Idx Fund Adm Shares is a very good fund and simple. It holds only tax free bonds as far as I know. If you want easy that is your answer no rebalancing for you to do. Great in times like this.
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Old 03-26-2020, 01:08 PM   #11
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One more question. If I harvest a loss in Account #1 at, say Vanguard, can I use that loss to offset a harvested gain in Account #2 at, say, Schwab?


That is, the balancing of loss vs gain doesn't have to be within one account at one instutition?
A loss is a loss from 1 brokerage or many. Same with a gain can come from 1 or many brokerages. Everything is counted on your tax return. That is in taxable.
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Old 03-26-2020, 05:00 PM   #12
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Well, that's a bummer.

I issued the transaction order to sell my VWIAX 20 minutes before the markets closed, with the price shown as $58.22. I had a nice cap gains loss to look forward to.

Alas, turns out it closed at $60.34, and since my average cost was $59.40, I've gone from a cap loss to a cap gain.

Fiddlesticks.
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Old 03-26-2020, 07:08 PM   #13
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While it is hard to do with VWIAX, for funds with ETF siblings I look at the day change for the ETF around 3:30 pm and adjust the last closing price for the fund in making my decision.
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Old 03-26-2020, 07:18 PM   #14
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Yep, I just read about that on another thread. So much to learn .... and I've just had another "learning experience."

I'm a bit relieved to have read that a couple of the more senior/astute members here have had the same .... hiccup .... in the past couple of days!

I still have an ETF (VTV) to sell, and it is still at a loss so I might do that first thing in the morning.
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Old 03-27-2020, 06:39 AM   #15
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Yep, I just read about that on another thread. So much to learn .... and I've just had another "learning experience."

I'm a bit relieved to have read that a couple of the more senior/astute members here have had the same .... hiccup .... in the past couple of days!

I still have an ETF (VTV) to sell, and it is still at a loss so I might do that first thing in the morning.
That happen to a lot of us. Getting rid of Wellesley will help your taxes(in the future) the most out of what is on your list. Sure beats doing it a month ago tax wise. The next best to get rid of for taxes(in the future) would be VG Balanced Idx Fund Adm Shares. That is because both these funds have taxable bond in them. Both of these fund are great just not for taxes. I wish that was the worst investment mistake I did. What tax bracket are you in?
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