I just peeked and saw that my Vanguard Ltd Term Tax Exempt Fund (VMLUX) is down over $8k. Seems worth doing a TLH at that amount.
What should I exchange to? For background: my AA is 50/50, and I am within a year of the end of the accumulation phase. Should I go to Short-Term, or Intermediate Term TE? Or something else?
TLH pair for Ltd Term Tax Exempt fund
Re: TLH pair for Ltd Term Tax Exempt fund
You could do a combination of short and intermediate TE, so average duration is about the same.
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Re: TLH pair for Ltd Term Tax Exempt fund
Which of the two options is preferable under the OP scenario:
1. Reinvest distributions now that the yield has increased?
2. TLH and reinvest proceeds at the higher yield (combination ST, IT-TE)?
It appears as though option 2 is preferable as long as the replacement fund/s have similar duration. Am I looking at this correctly?
1. Reinvest distributions now that the yield has increased?
2. TLH and reinvest proceeds at the higher yield (combination ST, IT-TE)?
It appears as though option 2 is preferable as long as the replacement fund/s have similar duration. Am I looking at this correctly?
Re: TLH pair for Ltd Term Tax Exempt fund
Interesting question about reinvesting distributions, Best of Both Worlds. My practice has always been NOT to reinvest distributions in my taxable accounts. (Or rather, not to reinvest distributions for things I may want to TLH).
Re: TLH pair for Ltd Term Tax Exempt fund
Hayden -- technically, to be in the same allocation you'd do something like 3/4 short-term TE and 1/4 interm-term TE.
BUT, to be honest, I find the yields on both ST and Limited-Term unexciting. 0.45% and 0.68%, yuck. By contrast, interm-term TE gives you 2% tax-exempt, at the cost of going to 5 year duration instead of 2.3 on the limited-term. Given that you don't need to extract your money all at once, it might be worth it, but take a look at the current volatility to make sure you're ok with it.
As for div reinvestment, it doesn't give you the tax-time discount of a TLH and it creates monthly tax lots which is a big pain to account for when you eventually sell it. I don't do it in any taxable accounts.
BUT, to be honest, I find the yields on both ST and Limited-Term unexciting. 0.45% and 0.68%, yuck. By contrast, interm-term TE gives you 2% tax-exempt, at the cost of going to 5 year duration instead of 2.3 on the limited-term. Given that you don't need to extract your money all at once, it might be worth it, but take a look at the current volatility to make sure you're ok with it.
As for div reinvestment, it doesn't give you the tax-time discount of a TLH and it creates monthly tax lots which is a big pain to account for when you eventually sell it. I don't do it in any taxable accounts.