I am considering harvesting some losses for tax purposes this year. Another thing I do not completely understand is how I could be showing a loss even though I have made money with it...
Ah, then that's a better question for a tax expert (which definitely does not include me!
)
Seriously, I'd point you to two sources. 1) Investopedia, for a solid explanation of tax-loss harvesting:
https://www.investopedia.com/terms/t/taxgainlossharvesting.asp Investopedia is generally a good resource.
2) A long-term chart of the performance of VFIDX. I use Google:
https://www.google.com/search?q=vfi...512l5j69i60.1438j0j7&sourceid=chrome&ie=UTF-8
Take note of the following quote from the Investopedia page: "Short-term losses can only be used to offset short-term capital gains tax. Long-term losses can only be used to offset long-term capital gains tax."
So if you're trying to offset a long-term capital gain, then you could use this strategy. If you don't have a long-term capital gain, then it seems to me that this question might be a moot point.
Based on what you've shared here, it's unclear whether you could claim a loss for tax purposes. Google's chart for VFIDX goes back to Feb. 16, 2001, at which time a share was $9.57--slightly above where it traded on Friday. Throughout 2007, the share price varied from $9.48 to $9.85. Except for 2008-2009, it seems that the share price for VFIDX has mostly remained in that $9.40-$10.00 band. As of market close on Friday, VFIDX is at $9.44.
So it really seems that it matters most
when you bought shares. If you bought them all at once on, say, Nov. 30, 2007, when the share price was $9.85, then it would seem to me that you
could claim a loss. If you bought them consistently over time, say on the first of every month, then I have no earthly idea.
I'm definitely not an accountant and on tax matters, self-education only goes so far. I think the best advice I can give you is to ask your CPA, if you have one. If you don't, you might consider compiling a bunch of your tax-related questions and making an appointment with a well-regarded one near you.
It's wise to ask this question before making any trades. But for this purpose, you need better information than you're likely to find on a message board, even one with as many smart & experienced people as this one.