Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Hi All,
Thanks to advice on this forum, I am switching to the "Trev H Four-Fund Portfolio" (viewtopic.php?t=38374), which uses equal portions of:
Vanguard Total Market (VTI)
Vanguard Total International Ex-US (VXUS)
Vanguard Small Value (VBR)
Vanguard International Small Cap (VSS)
Now, I am trying to identify tax loss harvesting partners.
I am planning to keep VTI, VXUS, and a little VSS in taxable accounts, as these seem to be the most tax efficient of the four funds.
I am hoping to stick with all Vanguard funds, but I am running into a problem choosing a parter for VSS.
So far, I am planning on these TLH partners:
VTI/VV or VOO
VXUS/VEU
VSS/???
Any thoughts on a strategy to use a Vanguard fund for a TLH partner for VSS, or otherwise how I should solve this issue? Much appreciated.
Thanks to advice on this forum, I am switching to the "Trev H Four-Fund Portfolio" (viewtopic.php?t=38374), which uses equal portions of:
Vanguard Total Market (VTI)
Vanguard Total International Ex-US (VXUS)
Vanguard Small Value (VBR)
Vanguard International Small Cap (VSS)
Now, I am trying to identify tax loss harvesting partners.
I am planning to keep VTI, VXUS, and a little VSS in taxable accounts, as these seem to be the most tax efficient of the four funds.
I am hoping to stick with all Vanguard funds, but I am running into a problem choosing a parter for VSS.
So far, I am planning on these TLH partners:
VTI/VV or VOO
VXUS/VEU
VSS/???
Any thoughts on a strategy to use a Vanguard fund for a TLH partner for VSS, or otherwise how I should solve this issue? Much appreciated.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
For VSS, I would not hold it in a taxable account, so I don't have to TLH it.
But if I did I would sell VSS at a loss and buy some large-cap international. Then new contributions would go into VSS after 30 days. Or I would exchange back into VSS if the VEU or VEA that I bought has a loss in that 30 days.
If you didn't like going to large-cap for 30 days or so, then SCZ and DGS would replace VSS. Nowadays there are plenty of other non-Vanguard small-cap foreign ETFs.
For VBR, I use IJS.
Full disclosure: I own VSS, VEU, VEA, and DGS. I used to own SCZ.
But if I did I would sell VSS at a loss and buy some large-cap international. Then new contributions would go into VSS after 30 days. Or I would exchange back into VSS if the VEU or VEA that I bought has a loss in that 30 days.
If you didn't like going to large-cap for 30 days or so, then SCZ and DGS would replace VSS. Nowadays there are plenty of other non-Vanguard small-cap foreign ETFs.
For VBR, I use IJS.
Full disclosure: I own VSS, VEU, VEA, and DGS. I used to own SCZ.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Hold on! I'm noting you have 19 prior posts so am going to assume you haven't been researching factor investing for decades. If you are an expert and have fully thought about it please let us know and what I say below won't apply.fedbogle wrote: ↑Sun Nov 19, 2017 12:19 pm Thanks to advice on this forum, I am switching to the "Trev H Four-Fund Portfolio" (viewtopic.php?t=38374), which uses equal portions of:
Vanguard Total Market (VTI)
Vanguard Total International Ex-US (VXUS)
Vanguard Small Value (VBR)
Vanguard International Small Cap (VSS)
Despite what you may have read this is NOT a common equity portfolio most people implement. What is your age and what percentage of your portfolio is in bonds? Keep in mind there are already small caps in Total Stock Market and Total International. Over 50% of equities in small caps is a theoretical portfolio not something that most people actually follow through on. It will be a more volatile with at times potentially years of tracking error relative to the total market. Risk is you'll be uncomfortable with the tracking error and decide to change your asset allocation during a market low.
Personally I do total market to small value/small international in a ratio of about 3 or 4 to 1. Very few people actually do 1 to 1.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Just to be clear, Trev's portfolio is not all stock. That just happens to be the ratios he uses for the stock portion of the portfolio. He leaves the amount and choices for the bond allocation to you.fedbogle wrote: ↑Sun Nov 19, 2017 12:19 pm Hi All,
Thanks to advice on this forum, I am switching to the "Trev H Four-Fund Portfolio" (viewtopic.php?t=38374), which uses equal portions of:
Vanguard Total Market (VTI)
Vanguard Total International Ex-US (VXUS)
Vanguard Small Value (VBR)
Vanguard International Small Cap (VSS)
Consider holding some bonds. Consider holding a minimum of 20%.
In addition, don't forget to use your plan at work, if you have one, before investing retirement money in a taxable account. If you don't have any of those 4 funds available at work, you may have difficulty implementing this portfolio idea.
Link to Asking Portfolio Questions
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
I'm happy with my 1/N slice and dice portfolio that reduces my exposure to Large Growth that crashed so far in 2000.
Others should do what suits them, since each of us will have to tolerate the market crashes.
Others should do what suits them, since each of us will have to tolerate the market crashes.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
That isn’t TrevH’s portfolio, anyway. You need a int’l LCV fund which Vanguard does not offer in ETF form. Even in their mutual funds they only offer an active fund, VTRIX.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Good catch. Took awhile for someone to notice!
Link to Asking Portfolio Questions
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Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
I am not an expert in the TrevH portfolio but i remember multiple folks mentioning in different threads that ILV can be replaced by ILB and ISV by IS.
And TrevH also posted a past history comparison chart for those replacements viewtopic.php?p=487691#p487691
And TrevH also posted a past history comparison chart for those replacements viewtopic.php?p=487691#p487691
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Correct. You should also take a look at what index he is using. VBR is called a Small Cap Value fund, but there are much smaller, much more valuey ETFs to use. S&P 600 Value index might be better than VBR in order to get both the small and value exposure.binvesting wrote: ↑Sun Nov 19, 2017 3:00 pm I am not an expert in the TrevH portfolio but i remember multiple folks mentioning in different threads that ILV can be replaced by ILB and ISV by IS.
And TrevH also posted a past history comparison chart for those replacements viewtopic.php?p=487691#p487691
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Thanks to the OP - so refreshing to hear from someone who is thinking beyond a 3 fund portfolio and offering different and potentially better options for us to consider. Interesting thread!
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Where is Trev H when you need him?
~ Member of the Active Retired Force since 2014 ~
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Hi Stan1, thanks for your post, I really appreciate it. I should have linked to a previous post with my full situation. Here is one viewtopic.php?f=1&t=222795stan1 wrote: ↑Sun Nov 19, 2017 12:31 pmHold on! I'm noting you have 19 prior posts so am going to assume you haven't been researching factor investing for decades. If you are an expert and have fully thought about it please let us know and what I say below won't apply.fedbogle wrote: ↑Sun Nov 19, 2017 12:19 pm Thanks to advice on this forum, I am switching to the "Trev H Four-Fund Portfolio" (viewtopic.php?t=38374), which uses equal portions of:
Vanguard Total Market (VTI)
Vanguard Total International Ex-US (VXUS)
Vanguard Small Value (VBR)
Vanguard International Small Cap (VSS)
Despite what you may have read this is NOT a common equity portfolio most people implement. What is your age and what percentage of your portfolio is in bonds? Keep in mind there are already small caps in Total Stock Market and Total International. Over 50% of equities in small caps is a theoretical portfolio not something that most people actually follow through on. It will be a more volatile with at times potentially years of tracking error relative to the total market. Risk is you'll be uncomfortable with the tracking error and decide to change your asset allocation during a market low.
Personally I do total market to small value/small international in a ratio of about 3 or 4 to 1. Very few people actually do 1 to 1.
I also should have added that I plan to use a Trev H-like approach for the equity portion with an 80/20 allocation to stocks/bonds. I am 40. I plan to increase the bond allocation over time, but I am still thinking that through. If pushed to say where I was at on that, I would say I would like to get to a 40% bond allocation by the time I am 60 and would gradually increase the bond portion until then.
I wouldn't call myself an expert, but I am also not a novice. I have been investing for about 20 years, and had mostly adopted a bogleheads approach during that time. I also weathered the 2007-9 crisis with an all equity portfolio and did not sell. Over the past year or so, I have studied up quite a bit on the forum and with most of the recommended books.
It is true I do not post much on the forum, as I do not feel that qualified to give advice.
Overall, I am comfortable with a very aggressive approach in AA and with tilt. It is always good to be questioned on it though, and I appreciate that.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Livesoft, thank you so much! I have greatly benefited from your posts, including this one.livesoft wrote: ↑Sun Nov 19, 2017 12:24 pm For VSS, I would not hold it in a taxable account, so I don't have to TLH it.
But if I did I would sell VSS at a loss and buy some large-cap international. Then new contributions would go into VSS after 30 days. Or I would exchange back into VSS if the VEU or VEA that I bought has a loss in that 30 days.
If you didn't like going to large-cap for 30 days or so, then SCZ and DGS would replace VSS. Nowadays there are plenty of other non-Vanguard small-cap foreign ETFs.
For VBR, I use IJS.
Full disclosure: I own VSS, VEU, VEA, and DGS. I used to own SCZ.
I'll have to look up the 30-day rule to make sure I fully understand it, but that approach makes sense to me and seems like it would work well.
I also would likely hold VBR in a taxable account, not VSS, I made a typo there and submitted my post too quick.
I decided to only hold Vanguard funds as I trust the company more, but sometimes I wonder if that is too extreme a decision. IJS looks like it would be great in a taxable account and I know it has better exposure to small value, as noted.
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Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
I use VYMI for my international large cap value. It's more dividend based than value based but I'm ok with it.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
RetiredJG, thanks for the post and the thoughts. I should have added some more background. I did so above. I max out my retirement plan (the TSP) and am using the F Fund for the bond portion of my AA, which is 20%.retiredjg wrote: ↑Sun Nov 19, 2017 12:56 pmJust to be clear, Trev's portfolio is not all stock. That just happens to be the ratios he uses for the stock portion of the portfolio. He leaves the amount and choices for the bond allocation to you.fedbogle wrote: ↑Sun Nov 19, 2017 12:19 pm Hi All,
Thanks to advice on this forum, I am switching to the "Trev H Four-Fund Portfolio" (viewtopic.php?t=38374), which uses equal portions of:
Vanguard Total Market (VTI)
Vanguard Total International Ex-US (VXUS)
Vanguard Small Value (VBR)
Vanguard International Small Cap (VSS)
Consider holding some bonds. Consider holding a minimum of 20%.
In addition, don't forget to use your plan at work, if you have one, before investing retirement money in a taxable account. If you don't have any of those 4 funds available at work, you may have difficulty implementing this portfolio idea.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Thanks binvesting for clarifying that. That is what I am going for. I recognize VBR is not the most valuey or small. That said, I prefer using Vanguard funds as I trust them more due to Vanguard's ownership structure, even if the funds are less targeted. I could potentially be swayed to IJS, but in the end I will probably stay with Vanguard.binvesting wrote: ↑Sun Nov 19, 2017 3:00 pm I am not an expert in the TrevH portfolio but i remember multiple folks mentioning in different threads that ILV can be replaced by ILB and ISV by IS.
And TrevH also posted a past history comparison chart for those replacements viewtopic.php?p=487691#p487691
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Thanks for the kind words! It is a somewhat radical approach for Bogleheads, but I like it.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
The biggest challenge when using these portfolios is getting over short term performance. Paul Merriman talks about this in his podcast a lot. It’s hard to stick with a very diversified portfolio when the S&P 500 is going gangbusters year after year. We live in the now and a day, month, year, or even 5 years can be so hard for us to live through.
I suppose though if you had Paul Merriman’s UB&H portfolio from 2000-2009 and you saw your neighbors have a -1% CAGR for 10 years while you made 6% CAGR you might feel differently. Then again, if you had started investing in 1990 and through 1999 you saw the S&P destroy the UB&H portfolio you might have abandoned it. I really think for most non 3 fund portfolios, the success you enjoy with it has to do with how it performs your first 10 years of investing.
I suppose though if you had Paul Merriman’s UB&H portfolio from 2000-2009 and you saw your neighbors have a -1% CAGR for 10 years while you made 6% CAGR you might feel differently. Then again, if you had started investing in 1990 and through 1999 you saw the S&P destroy the UB&H portfolio you might have abandoned it. I really think for most non 3 fund portfolios, the success you enjoy with it has to do with how it performs your first 10 years of investing.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Actually a large number of people here tilt to small and/or value. In fact there was a time when dozens of "tilting" threads were going all the time.
The pendulum has swung back toward the 3 fund portfolio lately though. I think this may be a result of the large influx of new posters asking for help setting up a portfolio. When someone is new to investing, something like the 3 fund portfolio is a more appropriate suggestion than suggesting something they may not understand or be ready for. I never suggest a tilt to a new person who has not specifically asked for it.
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Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Consider how many allocations are good enough if held through the market fluctuations. Pick what fits well, then keep it.
What matters more is savings rate, and we even have some control of that.
What matters more is savings rate, and we even have some control of that.
Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
I think the Larry Swedloe style approach is interesting as well.
Something like
30/30/40
SV/IS/ITT
Has a great past performance, and less volatile than most 2 & 3 fund approaches. (Per Trev H’s old threads).
Something like
30/30/40
SV/IS/ITT
Has a great past performance, and less volatile than most 2 & 3 fund approaches. (Per Trev H’s old threads).
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Re: Trev H Four-Fund Portfolio Tax Loss Harvesting Partner Options
Have you considered VIOV (Vanguard S&P Small-Cap 600 Value ETF)? It tracks the same index as IJS and has a lower expense ratio.