Tax Loss Harvest (TLH) VWIUX

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hudson
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Tax Loss Harvest (TLH) VWIUX

Post by hudson » Thu Sep 13, 2018 5:53 am

I'm in the process of selling VWIUX to harvest a short term loss. As soon as the sale completes, I plan to buy VTEB or MUB to replace it for at least 30 days.
VWIUX = Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares
VTEB = Vanguard Tax-Exempt Bond ETF
MUB = iShares National Muni Bond ETF

What do I use to replace VWIUX?
VTEB is considered to be a long bond fund; MUB is intermediate.
MUB seems most like VWIUX with comparable maturity, fees, and credit quality.
I'm not interested in the other Vanguard Mutual funds....because of the lower maturities and durations.

Is MUB now one of the no charge ETFs at Vanguard?

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Re: Tax Loss Harvest (TLH) VWIUX

Post by bloom2708 » Thu Sep 13, 2018 9:15 am

I used Limited-Term Tax-Exempt for tax loss harvesting Intermediate-Term Tax-Exempt.

After 31 days, move back to Intermediate-Term Tax-Exempt.
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Artsdoctor
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Re: Tax Loss Harvest (TLH) VWIUX

Post by Artsdoctor » Thu Sep 13, 2018 9:21 am

You might want to check the way you'd handle TLH in tax-exempt investments from a tax point of view. If the investment accumulates (and will pay) interest on a daily basis, you're free to trade the investment as you would any investment from a TLH point of view. However, if the investment pays interest only once monthly, then you'll be subject to the 6-month rule for handling losses in tax-exempt investments.

Your tax-exempt fund pays interest daily. The ETFs you're describing do not. We have an explanation of this process in the Wiki.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by SquawkIdent » Thu Sep 13, 2018 9:24 am

It seems like MUB is your answer as it's an intermediate holding also.

In reality, I wouldn't be hung up on this since you plan to move back into VWIUX after the waiting period anyways.

IMHO, any tax exempt VG fund would be fine as this is just a short term issue. If possible NAV decline during the 31 days is a real concern maybe just go to VMMXX.

Also, be concerned about the 6 month wash rule with tax exempt funds. I know VG funds aren't an issue but I'm not sure about the other ones listed as I've never used them.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Thu Sep 13, 2018 12:53 pm

Bloom2708: Limited Term Tax Exempt (VMLUX) does have its benefits for TLH as ARTSDOCTOR said.

He said that I could be subject to the 6-month rule for handling losses in tax-exempt investments if I bought MUB; I would be OK if I bought VMLUX.

The question is....what does the 6-month rule apply to?

My VWIUX sale for the TLH (That would be a show stopper)
OR
The later sale of MUB; I could return to VWIUX after 30 days...but that would depend on the current conditions.

I could do as SquawkIdent said and just go to VMMXX which is paying out over 2%...but no tax advantages.

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dratkinson
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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Thu Sep 13, 2018 1:57 pm

BH Tax Loss Harvest (TLH) VWIUX


"Daily-accrual" muni fund. A daily-accrual muni fund (not ETF) is exempt from IRS 6mo holding period requirement to protect tax-exempt dividends. Meaning shares are easy to sell (only simple CG reporting required).

See "Loss on mutual fund shares held 6 months or less": https://www.bogleheads.org/wiki/Tax_los ... harvesting

--Daily accrual, monthly paid: no TLH problem. (IRS believes we CAN’T game the system.)
--Monthly accrual, monthly paid: must hold underlying shares 6mos for dividends (from those shares) to be tax exempt. (IRS believes we CAN game the system.)

So use any daily-accrual muni fund and come back in >30days. (My faulty memory believes Vanguard’s muni index fund is/was monthly accrual. Double-check this.)



Unexpected capital gains. Due to offsetting effect of uncontrollable (small) capital gains when you come back, TLHing into a mmkt fund might work better than TLHing into another bond fund.

If you want a tax-exempt mmkt fund, can use VMSXX.



Another option: Just for fun, can reach for bonus dividends. But beware the dark side.

When I TLHed VWIUX, I noticed that VWLTX (more interest rate risk) was cheaper than VWIUX, which meant that I'd own more shares/dollar (bonus shares) of VWLTX after the trade than I owned with VWIUX. And each VWLTX share paid higher dividends. So what could be the harm in owning VWLTX for a month or so? Worse case, I’ll get to TLH VWLTX when I go back to VWIUX.

Bonus dividends. But after recording VWLTX’s first month’s dividend, I noticed something. What? It was a little larger than I expected. Why? Bonus shares x higher dividends/share = bonus dividends. So the recorded larger-than-expect dividend was due to… higher standard dividends + bonus dividends.

Long story short. After TLHing into VWLTX, I really liked the result---higher standard dividends + bonus dividends---so never came back to VWIUX. And all new contributions went to VWLTX, not to my remaining VWIUX.

Would I every sell VWLUX and come back to VWIUX. I’ve thought about this, probably not.

I’ve never been tempted to sell VWLUX when I had a capital gain. Why? I’d pay tax on the CG to get back to VWIUX, then lose VWLUX’s higher standard dividends + bonus dividends. No, thanks.

But what about TLHing VWLUX if I had a capital loss? Bond prices don’t fluctuate that much, so a worthwhile/large bond/muni TLH opportunity doesn't come around that often. Meaning, if I did TLH back to VWIUX, then I’ll be there for a long time. The math* implies a TLH benefit does not outweigh the long-term loss of the higher standard dividends + bonus dividends. No, thanks.

* Remember, tax deductions and TE dividends are affected by our tax rate. In the 25% fed tax bracket, a $1 deduction (TLH) is only worth $0.25 (=1*.25) in taxes saved (in additional after-tax income), but a $1 TE dividend is worth $1.33 (=$1/(1-.25)) in additional after-tax income. So a $1 TE dividend is worth 5x a $1 tax deduction in additional after-tax income. Meaning: In the long run, VWLUX’s higher TE dividend is worth more than a small TLH + smaller TE dividend if I TLH back to VWIUX.

But what about VWLUX’s higher interest rate risk and price instability? I have “enough” that I don’t foresee being forced to sell. And VWLUX’s lower price (+ resulting in bonus dividends) is a buying opportunity when I need to rebalance into bonds.


I became so enamored with VWLUX’s extra after-tax income that an itch developed to reach for more. While recommended higher-yield bond funds don’t exist in the wild, I thought I might be able to use the tax code and forum wisdom to find one. So I began reading/researching single-state muni funds*. (Vanguard doesn't have a CO muni fund.)

* The book/forum/blog thoughts of Larry Swedroe were most helpful as he identified the characteristics of individual muni bonds he AVOIDS when buying for his clients. I took his advice and used it to identify “funds to avoid” in my search for single-state muni funds. (After winnowing the candidates, I bought the only fund remaining. I posted my research process. If interested, can search forum for WTCOX, my CO muni fund.)



Beware the dark side... of reaching for additional yield. It can lead to extra study, work, going against BH mainstream wisdom, and second-guessing your alternate road to Dublin. :twisted: Bwa ha haaa.


My remaining VWIUX is now (1) >3-yrs of living expenses, (2) the last/largest tier of my formal EFs, (3) home projects, (4) new car, (5) and dry powder fund. It doesn't get new money as that goes to my LT national and IT single-state muni funds.

I will probably keep my remaining VWIUX at 3-5 years of living expenses. Why? The taxable-equivalent yield math says VWIUX produces more after-tax income for me than CDs. So if I sell any, will probably refill it to continue using it as a CD replacement---daily-accrual, higher after-tax income, no early withdrawal penalty. LTCG when I sell? Okay. TLH when I sell? Okay.



Bottom line. You can avoid a lot of temptation and work by TLHing to VMSXX---no daily-accrual worries, no uncontrollable capital gains, no higher dividends to awaken the itch for more after-tax income, no extra work researching single-state munis, no second-guessing your decision to follow other than the main road to Dublin,…. :)

Using lower-yield VMSXX avoids a lot of issues---the need to learn about each, the pain/hassle that must come from making/fixing mistakes, and second-guessing whether you missed anything.



Edit. Clarification of bonus dividends, and the dangers of finding them.
Last edited by dratkinson on Sun Sep 16, 2018 7:39 pm, edited 2 times in total.
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hudson
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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Fri Sep 14, 2018 6:00 am

Thanks Dratkinson!

It looks like ETFs won't work...tax problems. I'm glad that I asked the question!
Vanguard limited term, short term or long term would all work. The shorter term munis are safer; the Vanguard long muni is Vang. Risk Potential 3...but attractive.
The Vang. muni money market looks like your choice...and I just may bite.

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dratkinson
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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Fri Sep 14, 2018 10:31 am

By my actions, you know Vanguard's muni mmkt was not MY choice. But I believe it's a very good choice to keep TLHing simple, because there is almost nothing to research/think about.


But after you've done the research/thinking---which you've done now---you can use something better. To that end....

I believe most others are happier using the ST- or Ltd-term munis as a TLH pair. It's only one more Sch D entry to do so---very little additional tax-reporting work---plus they earn a little more in TE dividends while there vs in VMSXX. So if I were doing it the the BH way, I'd choose the Ltd-term muni... for the higher dividends.

Your choice.

Just be aware, it's hard to come back if you TLH to the dark side (LT's higher dividends).
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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Fri Sep 14, 2018 10:46 am

Dratkinson,

Thanks again!
I think that limited term or muni money market are both better than ETFs for the TLH swap.
I agree about the long muni bond dark side...but let's reach for a little yield!

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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Sun Sep 16, 2018 7:47 pm

I've edited my post above with additional thoughts that may interest you.

If you TLH to VWLTX, I'd be curious to know your thoughts/experience. If you make it back to VWIUX. Or not. :)
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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Mon Sep 17, 2018 7:16 am

dratkinson wrote:
Sun Sep 16, 2018 7:47 pm
I've edited my post above with additional thoughts that may interest you.

If you TLH to VWLTX, I'd be curious to know your thoughts/experience. If you make it back to VWIUX. Or not. :)
Thanks Dratkinson! I've TLHed to Vang.'s Long Muni before...nice distributions. I think that I need to stay away from long (Larry Swedroe's advice)...but VWIUX is full of long munis. I'm always tempted to move back to Baird's intermediate muni BMBIX....as you know...much safer...also less distribution.

State munis don't work for me. There are lots of state funds out there but all are either high expense or have loads; all are losers compared to VWIUX.
Individual munis don't work for me...too much work and too much expertise needed.

This time, I went with Vang.'s limited term muni. At some time, I'll likely move back to VWIUX...or BMBIX.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Mon Sep 17, 2018 5:26 pm

hudson wrote:
Mon Sep 17, 2018 7:16 am
dratkinson wrote:
Sun Sep 16, 2018 7:47 pm
I've edited my post above with additional thoughts that may interest you.

If you TLH to VWLTX, I'd be curious to know your thoughts/experience. If you make it back to VWIUX. Or not. :)
Thanks Dratkinson! I've TLHed to Vang.'s Long Muni before...nice distributions. I think that I need to stay away from long (Larry Swedroe's advice)...but VWIUX is full of long munis. I'm always tempted to move back to Baird's intermediate muni BMBIX....as you know...much safer...also less distribution.

State munis don't work for me. There are lots of state funds out there but all are either high expense or have loads; all are losers compared to VWIUX.
Individual munis don't work for me...too much work and too much expertise needed.

This time, I went with Vang.'s limited term muni. At some time, I'll likely move back to VWIUX...or BMBIX.
I can understand your decision and acknowledge it is the recommended route.


I read Swedroe and respect his opinion to avoid LT.

(1) I also read Thau's* "The Bond Book". She was accepting of muni funds with a duration of <10 years. VWLTX's duration was, still is, <10 years. (* Thau use to be on the BH list of recommended authors.)

(2) Forum advice. In total return investing (capital gains + distributions (dividends + capital gains)), the major long-term component of bond fund total return is from dividends.

(3) Forum advice. When recommended experts agree, that is the central road to Dublin. When recommended experts disagree, those are alternate routes.

What to do? How to reconcile the slightly differing Swedroe/Thau opinions? I decided to resolve the issue by following the BH advice (3).

I understood that alternate routes are only for those able/willing to accept a little more risk. Thought I could handle the extra risk, so decided to follow Thau's advice (1) and bought VWLTX for the extra dividends (2), and to hold for the long-term.

"I believe I have been adequately compensated for accepting the additional risk." Those are the magic words we should be able to say after executing our decision to accept more risk. And true in my case.


I recall both advised against owning high-yield funds (taxable and tax-exempt). The wiki does have an article saying it's okay to own a little HY (~10% of total bonds, if memory serves). At my final 50/50 AA, a 10% allocation to HY would be only 5% of total investments, so too small to help/hurt much... and I don't really need another fund to manage. So I do follow the Swedroe/Thau advice to avoid HY.



Single-state munis. My experience is the same as your's. When I researched them, they were all terrible (loads, high ER, leverage, AMT exposure,...). Well, almost all. I did find one that met all requirements to be acceptable, except for a slightly higher ER.

I recalled the recommended authors said an acceptable large bond fund should have an ER of <=.50. The fund I found was not a large fund, and it's ER was .65. After thinking about it, decided that a slightly higher ER for a small fund was okay. So bought a little to try it. Then a little more. It has worked out okay. So far.

The fund's biggest limiting factor is the $25K/day purchase/withdrawal limit. But having to make withdrawals over 2-days to buy a new car is probably a "first-world problem". :)


I do plan to follow the forum's advice to limit the risk of single-state munis by pairing 50/50 with national funds. Assuming the market continues upward and I'm still rebalancing into bonds, should reach a 50/50 balance next year.



Individual bonds. Agree. Don't want the hassle of individual bonds for myself or heirs.



Edit. Clarity. ..."major component of long-term"... could be confused to mean “LT bond fund”. Not the intent.
Last edited by dratkinson on Mon Sep 17, 2018 7:03 pm, edited 1 time in total.
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Re: Tax Loss Harvest (TLH) VWIUX

Post by Artsdoctor » Mon Sep 17, 2018 5:53 pm

I'd be hard-pressed to find two bond experts more qualified than Larry Swedroe and Annette Thau. I don't think that they contradict each other: both advocate intermediate-term bonds over long-term bonds since you're going to get a decent return even when compared to long-term bonds with less risk. We've been fortunate over many years now that interest rates have just gone down and down, although we're just now starting to see a bit of an ascent (more so on the short-term side).

I am very cautious when using duration. It's really meant to compare two funds and really shouldn't serve as a guarantee. I know that many people think of it as a measure of time needed to recoup your loss after an interest rate increase but that's a very, very rough estimate. Vanguard's "long-term" muni fund has a relatively short duration (6.9 years) when you compare it to other "long-term" bond funds, but the average maturity is still listed as 16.7 years. I can't look into the future but I'd be very skeptical assuming that the long-term fund is "almost as safe" as the intermediate-term fund in a rising rate environment.

Over many years, one has been paid relatively well for investing in long-term funds but that's because we've been in a falling rate environment for over a decade (some would say several decades).

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Tue Sep 18, 2018 11:06 am

Thanks again Dratkinson! I am also very tempted by Vang.'s long muni fund.
Thanks for sharing your rationale! I pretty much agree with all.
Have you looked at Baird's Intermediate Muni BMBIX? I know the yield stinks; I would bet the Larry S would approve. The last time I looked it was AAA/AA all the way.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Tue Sep 18, 2018 11:09 am

Artsdoctor wrote:
Mon Sep 17, 2018 5:53 pm
I'd be hard-pressed to find two bond experts more qualified than Larry Swedroe and Annette Thau. I don't think that they contradict each other: both advocate intermediate-term bonds over long-term bonds since you're going to get a decent return even when compared to long-term bonds with less risk. We've been fortunate over many years now that interest rates have just gone down and down, although we're just now starting to see a bit of an ascent (more so on the short-term side).

I am very cautious when using duration. It's really meant to compare two funds and really shouldn't serve as a guarantee. I know that many people think of it as a measure of time needed to recoup your loss after an interest rate increase but that's a very, very rough estimate. Vanguard's "long-term" muni fund has a relatively short duration (6.9 years) when you compare it to other "long-term" bond funds, but the average maturity is still listed as 16.7 years. I can't look into the future but I'd be very skeptical assuming that the long-term fund is "almost as safe" as the intermediate-term fund in a rising rate environment.

Over many years, one has been paid relatively well for investing in long-term funds but that's because we've been in a falling rate environment for over a decade (some would say several decades).
Thanks Artsdoctor! I keep comparing Vanguard's intermediate muni and the long term muni; lately, I've decided to stay intermediate. The long muni's distribution yield is tempting.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by Artsdoctor » Tue Sep 18, 2018 4:17 pm

^ One of my favorite well-worn adages: More money has been lost reaching for yield than at the point of a gun.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Tue Sep 18, 2018 10:48 pm

^ I prefer: Be greedy when others are fearful; be fearful when others are greedy. :)

N.B. Above must be tempered by the fact that Mr. Buffett also said, “Don’t be too greedy.”



Within reason---as allowed by recommended authors and forum wisdom---I believe it’s okay to reach for additional yield. Provided we have the willingness, need, and ability to do so.


Simple Action Steps. Much of BH theory is beyond me (don’t spend much time the forum Theory section) and I'm not knowledgeable enough to determine “reasonable risk”. So I make decisions by using the Simple Action Steps I develop from the advice of recommended authors and the forum’s senior members. If any can provide some wiggle room to increase yield (an alternate route to Dublin), provided we meet all of the conditions to accept the additional risk, then that is my criteria for determining “reasonable risk”.

I recall identifying these areas for muni wiggle room (to reach for additional yield) from my reading.
--Books. Fund should be acceptable (low cost, no load/AMT/leverage, …recommended fund company).
--Thau. Duration of <=10yr is acceptable if you can hold for the long-term.
--Swedroe. Need 20(?) basis points additional yield for each additional year of duration (IT vs LT funds).

My Simple Action Steps to choose VWLTX (from memory).
--Is it an acceptable fund? Yes.
--Is its duration <=10 years? Yes.
--Can I hold it for >10 years? Yes.
--Does it provide 20 basis points of additional yield for each year of additional duration (over VWITX)? Yes*.

* It was only after buying VWLTX that I noticed the bonus dividends (additional dividends due to additional shares purchases because of its lower price). At today’s prices (VWIUX/VWLUX, 13.78/11.29=1.22), my wag is the bonus dividends increase VWLUX's yield by ~20%, over what VWLUX is expected to provide over VWIUX---SEC yield vs SEC yield.

Example: Today’s SEC yields (ycharts.com, works with my old PC, may be inaccurate.)
--VWIUX: 2.56%.
--VWLUX: 2.90% x 1.2 = 3.48%, after adding bonus dividends purchased by additional shares.**

** This is >20 basis points/yr for the additional duration. “I believe I have been adequately compensated for accepting the additional risk.” :)


Sidebar. As part of my effort to simplify my investments, I researched/bought a single-state muni in 2015. It was funded by selling my remaining individual stocks, and redeeming my savings bonds. So I had a little more bonds after the dust settled and closed two accounts (brokerage, and TD).

As it happens, my IT single-state muni (selected by developing a list of Simple Action Steps to do so) is about the same price as VWLUX. But because it’s considered a more risky fund, its SEC yield is a little higher than VWLUX. Meaning when compared to VWIUX… it has higher bonus dividends + state tax advantage. So far it’s been doubleplusgood. (I do follow the forum’s advice to pair it 50/50 with my national funds (IT and LT) to reduce my single-state risk.)



My 5yr due diligence with safer bonds: 2008-2012. I had my forum review in early 2008, and put VFITX (IT treasury) and VIPSX (inflation protected securities) in my small orphaned rIRA, and tax-efficient equities and (skewed toward) safer munis in taxable. Because that was the acknowledged wisdom of the recommended authors and forum.

Bottom line. I hated it. My taxable account was growing faster than my rIRA. But I’d paid taxes to get into a rIRA for growth. I wanted growth. Eventually the day came in late 2012 (~5yrs after my forum review) when I could stand it no longer and VFITX and VIPSX had to go. I'd “lived” my due diligence and learned that safe low-yield bonds bore me to tears. I didn’t SWAN (sleep well at night).

After my forum review (early 2008), my bonds in taxable were a healthy amount of VMLTX, for safety---because "munis are risky"---paired with VWITX, the recommended sweet spot on risk/return yield curve, and a little bit of VWLTX, to see what would happen. Nothing unexpected happened---all dividends for all funds came in as expected**.

** For several years I was a little OCD---because "munis are risky"---and double-checked Vanguard’s reported distributions/share against my recorded dividends. After making allowances for pro-rated dividends and rounding, everything was correct. Always. So I stopped checking.

In late 2012, I converted my small orphaned rIRA to a fun-money equity play to "shoot for the moon"***. As part of this change I sold VMLTX and bought more VWLUX.

*** The wiki allows us the option to “shoot for the moon” in our tax-advantaged accounts. And my rIRA, after lagging behind for 5yrs, began growing a little faster than my taxable account.

Bottom line. Within reason---as allowed by recommended authors and forum wisdom---I believe it’s okay to reach for additional yield. Provided we have the willingness, need, and ability to do so.

The VWLTX/VWLUX bonus dividends provide an extra margin of safety that made the choice easier for me to live with.


hudson wrote:
Tue Sep 18, 2018 11:06 am
...
Have you looked at Baird's Intermediate Muni BMBIX? I know the yield stinks...
I have read on the forum that it’s a recommended safe fund. I looked and its SEC yield is a little lower than VWIUX’s (ycharts.com): 2.16% vs 2.56%.

But I've done my 5yr due diligence and know me. Doing more work to change to a safer lower-yield fund is probably not going to happen.

Simple Action Step. What, I can do nothing, stay where I am, have more yield, and the risk is reasonable? Okay. :)
Last edited by dratkinson on Wed Sep 19, 2018 5:29 am, edited 2 times in total.
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What Would L Swedroe, R Ferri, and W.Bernstein Buy?

Post by hudson » Wed Sep 19, 2018 5:18 am

Thanks Dratkinson! Vang. Long Muni is looking better!

Using these numbers what would Larry, Rick, or Bill buy?
My guess is that Larry and Bill would go with BMBIX; Rick would split VWIUX and VWLUX.
Dratkinson would go with VWLUX; Hudson would go with VWIUX; Artsdoctor would go with VWIUX.
(Larry would actually buy individual in-state munis)
I can't predict what Dr. Thau would buy; it's been a long time since I read her book; I need to re-read!

Vang Long VWLUX / Vang Intermediate VWIUX/ Baird Intermediate BMBIX

Back of envelope numbers

Vanguard's Risk Potential 3/2/1...maybe
SEC Yield 2.93/2.58/2.16
Average Duration 6.9/5.2/4.42
Average Stated Duration 16.9/8.9/ can't find
AAA/AA 63%/69%/99%
Distribution Yield 3.49%/2.87%/2.39%

BMBIX....Prefunded Bonds 54%

You pays your money...you takes your chances

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Re: What Would L Swedroe, R Ferri, and W.Bernstein Buy?

Post by dratkinson » Wed Sep 19, 2018 6:05 am

hudson wrote:
Wed Sep 19, 2018 5:18 am
Thanks Dratkinson! Vang. Long Muni is looking better!

Using these numbers what would Larry, Rick, or Bill buy?
My guess is that Larry and Bill would go with BMBIX; Rick would split VWIUX and VWLUX.
Dratkinson would go with VWLUX; Hudson would go with VWIUX; Artsdoctor would go with VWIUX.
(Larry would actually buy individual in-state munis)
I can't predict what Dr. Thau would buy; it's been a long time since I read her book; I need to re-read!

Vang Long VWLUX / Vang Intermediate VWIUX/ Baird Intermediate BMBIX

Back of envelope numbers

Vanguard's Risk Potential 3/2/1...maybe
SEC Yield 2.93/2.58/2.16
Average Duration 6.9/5.2/4.42
Average Stated Duration 16.9/8.9/ can't find
AAA/AA 63%/69%/99%
Distribution Yield 3.49%/2.87%/2.39%

BMBIX....Prefunded Bonds 54%

I seem to recall that pre-refunded bonds lost their tax-exempt status with the last tax legislation. I'd want to research what the tax implications are for BMBIX before buying. Maybe it's explained in the current prospectus.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Wed Sep 19, 2018 7:24 am

Dratkinson: Prefunded: I'd like to see what you find out.
I owned BMBIX for several years and didn't notice any tax issues...that doesn't mean a whole lot.
I did a quick search and found something about "refunded" in a tax bill...but nothing in a tax law.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by Artsdoctor » Wed Sep 19, 2018 8:56 am

dratkinson wrote:
Tue Sep 18, 2018 10:48 pm
^ I prefer: Be greedy when others are fearful; be fearful when others are greedy. :)

N.B. Above must be tempered by the fact that Mr. Buffett also said, “Don’t be too greedy.”



Within reason---as allowed by recommended authors and forum wisdom---I believe it’s okay to reach for additional yield. Provided we have the willingness, need, and ability to do so.


Simple Action Steps. Much of BH theory is beyond me (don’t spend much time the forum Theory section) and I'm not knowledgeable enough to determine “reasonable risk”. So I make decisions by using the Simple Action Steps I develop from the advice of recommended authors and the forum’s senior members. If any can provide some wiggle room to increase yield (an alternate route to Dublin), provided we meet all of the conditions to accept the additional risk, then that is my criteria for determining “reasonable risk”.

I recall identifying these areas for muni wiggle room (to reach for additional yield) from my reading.
--Books. Fund should be acceptable (low cost, no load/AMT/leverage, …recommended fund company).
--Thau. Duration of <=10yr is acceptable if you can hold for the long-term.
--Swedroe. Need 20(?) basis points additional yield for each additional year of duration (IT vs LT funds).

My Simple Action Steps to choose VWLTX (from memory).
--Is it an acceptable fund? Yes.
--Is its duration <=10 years? Yes.
--Can I hold it for >10 years? Yes.
--Does it provide 20 basis points of additional yield for each year of additional duration (over VWITX)? Yes*.
You can certainly design your bond portfolio anyway which is most comfortable for you. The only thing I would recommend that we all do is to do it with as much knowledge as we can comfortably absorb.

Your recommendations from above are not based on what those authorities recommend. So we should clarify what the bond experts actually do say in their published works.

In Larry Swedroe's book, "The Only Guide to a Winning Bond Strategy," (page 77), he writes: "Vanguard offers a short-term, an intermediate-term, and a long-term bond fund. Vanguard publishes the average maturity of their funds, allowing us to employ a shifting-maturity strategy. Let's see how this would work. Let's assume that the average maturity of the 3 Vanguard funds is two, five, and eight years, respectively. Applying our rule of thumb, we would buy the fund with the highest yield, as long as it met the criteria of providing at least 20 basis points of extra yield for each year of extra maturity (due to the tax-exemption available on municipal bonds, the hurdle rate to extend would be perhaps just 15 basis points)." The bold and underscored words are highlighted by me.

In Annette Thau's book, "The Bond Book," Third Edition, (page 357), she writes: "If you are investing primarily for "income" and safety of principal is important to you, don't buy the longest-term funds or those with the highest stated yield (those will be the riskiest funds). Instead, stick to funds that have intermediate (or shorter) maturities (whether taxable or tax-exempt) and invest in high-quality bonds." The underscored words are highlighted by me.

I think what is happening here is that the terms "maturity" and "duration" are being used interchangeably, which is incorrect. If anyone is contemplating buying bonds or bond funds which have the term "long" in term, I would humbly suggest that they take a step back and read up on exactly what the pros and cons of that decision might mean. After that, you can then make an informed decision.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Thu Sep 20, 2018 5:47 pm

hudson wrote:
Wed Sep 19, 2018 7:24 am
Dratkinson: Prefunded: I'd like to see what you find out.
I owned BMBIX for several years and didn't notice any tax issues...that doesn't mean a whole lot.
I did a quick search and found something about "refunded" in a tax bill...but nothing in a tax law.
I'm not planning to research BMBIX; would only do that if I planned to buy it. But if interested, the prospectus is probably online so should be easy to get. If there were negative impacts from the new tax law, would expect an addendum identifying them.




Artsdoctor wrote:
Wed Sep 19, 2018 8:56 am
...
In Annette Thau's book, "The Bond Book," Third Edition, (page 357), she writes: "If you are investing primarily for "income" and safety of principal is important to you, don't buy the longest-term funds or those with the highest stated yield (those will be the riskiest funds). Instead, stick to funds that have intermediate (or shorter) maturities (whether taxable or tax-exempt) and invest in high-quality bonds." The underscored words are highlighted by me.

I think what is happening here is that the terms "maturity" and "duration" are being used interchangeably, which is incorrect. ...
Agreed. We should not confuse the author’s words/intent.

You have me second-guessing myself, and I don’t have a sense for the magnitude of the error this could have caused.

I’m sure I read both in my beginning, but only changed to current bonds ~5yr later, so my memory error crept in between those times. Need to re-read both to correct my memory.

I went by the library yesterday. Both books are out so it will be a while before I can re-read them.

(1) I will be trying specifically to find a reference to Thau “…accepting bonds of <=10yr duration/average maturity”. I truly don’t remember what she said. But I did hang a portion of my decision on that (mis?)remembered advice.

When/if I again find that reference, will try to remember to post it here as an update.

Thanks for the correction.


(2) ... "If you are investing primarily for "income" and safety of principal is important to you, don't buy the longest-term funds or those with the highest stated yield (those will be the riskiest funds) ....

I remember her saying that… and saw it as my wiggle room to reach for additional yield. Why? After my 5yr due diligence experience with safe low-yield bond funds, I now prefer less-safe higher-yield bond funds.

(3) Also because forum wisdom says...
--The major long-term component of bond fund total return comes from dividends.
--Stocks can lose 50-90% during a crash; bonds can lose 5-15% during a crash.

My simple action step. Don't sweat owning good bonds, and… Vanguard has a reputation for buying bonds that are good enough.

I’ve seen VWLTX/VWLUX price declines as a buying opportunity. Since 2008, I recall their largest 52wk price spread has been <$1. Currently it's <50-cents. Either way, not much of a buying opportunity.

Concede mine is an alternate route (may also be built upon a faulty memory map), and not for the new investor who hasn't determined their risk tolerance.



Hudson. Since my memory seems to be faulty about what the recommended authors said, to be safe, might want to stay away from LT national until you know you can withstand the additional risk.

Simple action step. If your EF tiers (which includes your safer bonds) contain >10yrs of living expenses, then you can probably withstand more risk. If you want to.



Edit.
Last edited by dratkinson on Fri Sep 21, 2018 6:11 am, edited 1 time in total.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Thu Sep 20, 2018 7:35 pm

Thanks again Dratkinson!

I've owned both the Vang. Long Muni and BMBIX; at this time I'm OK with VWIUX. No research needed.

I think that I made good harvest getting a good short term capital loss. (Vang. Intermediate Muni to Vang Limited Term Muni) Thanks to this discussion, I didn't go to an ETF like MUB or VTEB.

I might go for another harvest before the end of the year if the trend continues.

BMBIX, VWIUX, and VWLUX...each has its advantages and disadvantages.

Do we want safety or yield?

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Re: Tax Loss Harvest (TLH) VWIUX

Post by Artsdoctor » Fri Sep 21, 2018 4:46 pm

^ I apologize for any confusion. I never meant to argue that one had to choose between safety or yield. The crux of the matter is essentially: are you being compensated fairly for your the risk you might be taking. It's not an either/or situation. For example, you might be paid 3% annually for a 6-year bond; the 7-year bond from the same issuer might pay you 3.5% annually; many people would say it's worth it. Conversely, if the 7-year bond is paying 3.01% annually, then many would say you're just not being compensated for extending the maturity.

It is definitely true that equities are more likely to be volatile than bonds. However, there are occasional periods where bonds can be VERY volatile, and the longer bonds are the MOST volatile. We've not really seen a striking bear market in bonds since the early 1970's and there are safeguards in place that didn't exist 45 years ago. However, that doesn't mean that you can't be hurt significantly by holding bonds, and long bonds are more likely to inflict pain than shorter bonds.

If you're new to investing in bonds, you just need to know that MOST investors are going to be investing in intermediate bonds. If you want to go short or long, that's fine but my advice would be to know what you're doing, why you're doing it, and to be able to weigh the pros and cons reasonably for doing so.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by UpperNwGuy » Fri Sep 21, 2018 4:58 pm

Speaking of MUB, I just saw an article that said that yesterday was MUB’s largest outflow in nearly two years. Did something happen in the municipal bond market yesterday while I was focusing on other things?
Buy-and-hold retired investor with a 60/40 taxable portfolio: Total Stock + Total Int'l + Total Bond + Interm Term Tax Exempt.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by dratkinson » Fri Sep 21, 2018 7:04 pm

Have learned I was making another mistake. What? The LT national fund does not have "bonus dividends". Why? Because the SEC Yield calculation is based on shares outstanding. So, no bonus shares = no bonus dividends.

See answer: viewtopic.php?p=4130742#p4130742

Sorry for the confusion.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Fri Sep 21, 2018 7:43 pm

dratkinson wrote:
Fri Sep 21, 2018 7:04 pm
Have learned I was making another mistake. What? The LT national fund does not have "bonus dividends". Why? Because the SEC Yield calculation is based on shares outstanding. So, no bonus shares = no bonus dividends.

See answer: viewtopic.php?p=4130742#p4130742

Sorry for the confusion.
Thanks Dratkinson!

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Fri Sep 21, 2018 7:49 pm

UpperNwGuy wrote:
Fri Sep 21, 2018 4:58 pm
Speaking of MUB, I just saw an article that said that yesterday was MUB’s largest outflow in nearly two years. Did something happen in the municipal bond market yesterday while I was focusing on other things?
I don't know the answer....but just some thoughts.
Over the last month the 10 year treasury yield has gone up.
Over the last month Muni Bond prices have gone down.....specifically intermediate munis like MUB and VWIUX and long muni VTEB. That's all I looked at.
For me, it's a great time to Tax Loss Harvest.

Could the outflow in MUB be related to the rise in 10 year treasury interest rates?

MUB: click on 1 month: https://www.google.com/search?q=mub&oq= ... e&ie=UTF-8

VWIUX: click on 1 month: https://www.google.com/search?q=vwiux&o ... e&ie=UTF-8

VTEB: click on 1 month: https://www.google.com/search?q=vteb&oq ... e&ie=UTF-8

10 year treasury: click on 1 month https://ycharts.com/indicators/10_year_treasury_rate

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NEW QUESTION: Harvest again in less than 31 days

Post by hudson » Sat Sep 22, 2018 5:36 am

I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest. I don't think that I need to wait 31 days to harvest this new loss....do I?

I would not go back to VWIUX.
I would go from VMLUX to V. Short Muni or V. Long Muni for 31 days.

The big question is....After a harvest to a new holding, do I need to wait 31 days to harvest again?

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House Blend...Useful Comment in another discussion

Post by hudson » Sat Sep 22, 2018 11:46 am

House Blend...Useful Comments in another discussion

He talks about using ETFs as a TLH partner with Vanguard Munis.
He likes using 50:50 V. Long Muni and V. Limited Term Muni as a TLH partner with V. Intermediate Term Muni


viewtopic.php?p=4129776#p4129776

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by goingup » Sat Sep 22, 2018 12:23 pm

hudson wrote:
Sat Sep 22, 2018 5:36 am
I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest.
The price difference between those dates is .02. (2 cents). You must have a very large position to make that harvest worthwhile. I admit that I dislike TLH because it usually leads to a proliferation of funds.

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by am » Sat Sep 22, 2018 1:06 pm

goingup wrote:
Sat Sep 22, 2018 12:23 pm
hudson wrote:
Sat Sep 22, 2018 5:36 am
I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest.
The price difference between those dates is .02. (2 cents). You must have a very large position to make that harvest worthwhile. I admit that I dislike TLH because it usually leads to a proliferation of funds.
Same here. My taxable account has double the number of funds because of harvesting, but a small price to pay for the benefits.

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by hudson » Sat Sep 22, 2018 2:56 pm

goingup

Thanks! I only checked Vanguard's Cost Basis button; I never looked at the actual price differences.

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by SquawkIdent » Sat Sep 22, 2018 3:15 pm

goingup wrote:
Sat Sep 22, 2018 12:23 pm
hudson wrote:
Sat Sep 22, 2018 5:36 am
I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest.
The price difference between those dates is .02. (2 cents). You must have a very large position to make that harvest worthwhile. I admit that I dislike TLH because it usually leads to a proliferation of funds.
One other added downside of TLH is it always leads to having to pay higher capital gains taxes later on. You are going to pay them one way or another. That is what I wrestle with as far as is it even worth it to just delay the tax man. :sharebeer

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by am » Sat Sep 22, 2018 3:46 pm

SquawkIdent wrote:
Sat Sep 22, 2018 3:15 pm
goingup wrote:
Sat Sep 22, 2018 12:23 pm
hudson wrote:
Sat Sep 22, 2018 5:36 am
I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest.
The price difference between those dates is .02. (2 cents). You must have a very large position to make that harvest worthwhile. I admit that I dislike TLH because it usually leads to a proliferation of funds.
One other added downside of TLH is it always leads to having to pay higher capital gains taxes later on. You are going to pay them one way or another. That is what I wrestle with as far as is it even worth it to just delay the tax man. :sharebeer
Not always because you may be in a 0% cap gains bracket or die and get stepped up basis for heirs. Better to defer taxes into the future and get the benefit now.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by PFInterest » Sat Sep 22, 2018 3:56 pm

hudson wrote:
Thu Sep 13, 2018 5:53 am
I'm in the process of selling VWIUX to harvest a short term loss. As soon as the sale completes, I plan to buy VTEB or MUB to replace it for at least 30 days.
VWIUX = Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares
VTEB = Vanguard Tax-Exempt Bond ETF
MUB = iShares National Muni Bond ETF

What do I use to replace VWIUX?
VTEB is considered to be a long bond fund; MUB is intermediate.
MUB seems most like VWIUX with comparable maturity, fees, and credit quality.
I'm not interested in the other Vanguard Mutual funds....because of the lower maturities and durations.

Is MUB now one of the no charge ETFs at Vanguard?
limited term, and 31 days.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by hudson » Sat Sep 22, 2018 4:01 pm

PFInterest wrote:
Sat Sep 22, 2018 3:56 pm
hudson wrote:
Thu Sep 13, 2018 5:53 am
I'm in the process of selling VWIUX to harvest a short term loss. As soon as the sale completes, I plan to buy VTEB or MUB to replace it for at least 30 days.
VWIUX = Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares
VTEB = Vanguard Tax-Exempt Bond ETF
MUB = iShares National Muni Bond ETF

What do I use to replace VWIUX?
VTEB is considered to be a long bond fund; MUB is intermediate.
MUB seems most like VWIUX with comparable maturity, fees, and credit quality.
I'm not interested in the other Vanguard Mutual funds....because of the lower maturities and durations.

Is MUB now one of the no charge ETFs at Vanguard?
limited term, and 31 days.
That seems to be the consensus of the discussion...and that's what I did...thanks!

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Re: Tax Loss Harvest (TLH) VWIUX

Post by PFInterest » Sat Sep 22, 2018 4:02 pm

SquawkIdent wrote:
Thu Sep 13, 2018 9:24 am
IMHO, any tax exempt VG fund would be fine as this is just a short term issue. If possible NAV decline during the 31 days is a real concern maybe just go to VMMXX.
not really. you just TLH back into the original fund.

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by Artsdoctor » Sat Sep 22, 2018 4:32 pm

SquawkIdent wrote:
Sat Sep 22, 2018 3:15 pm
goingup wrote:
Sat Sep 22, 2018 12:23 pm
hudson wrote:
Sat Sep 22, 2018 5:36 am
I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest.
The price difference between those dates is .02. (2 cents). You must have a very large position to make that harvest worthwhile. I admit that I dislike TLH because it usually leads to a proliferation of funds.
One other added downside of TLH is it always leads to having to pay higher capital gains taxes later on. You are going to pay them one way or another. That is what I wrestle with as far as is it even worth it to just delay the tax man. :sharebeer
This is an important point: it does not ALWAYS lead to paying capital gains in the future. It is true that your new cost basis will be lower (and lower, and lower) as you TLH in down markets. But remember that those shares with the lowest costs basis will be the best shares to ultimately donate to charity—not implying that ALL with be donated. :happy

And remember that cost basis will be reset (either partially or totally, depending on the state) when you or your spouse dies. It’s an unpleasant thought but it might come into play for many.

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Re: NEW QUESTION: Harvest again in less than 31 days

Post by SquawkIdent » Sun Sep 23, 2018 8:26 am

am wrote:
Sat Sep 22, 2018 3:46 pm
SquawkIdent wrote:
Sat Sep 22, 2018 3:15 pm
goingup wrote:
Sat Sep 22, 2018 12:23 pm
hudson wrote:
Sat Sep 22, 2018 5:36 am
I harvested from VWIUX (V. Int. Muni) to VMLUX (V. Limited T. Muni) on Sep. 14th...today is Sep 22d.

VMLUX has a loss big enough to harvest.
The price difference between those dates is .02. (2 cents). You must have a very large position to make that harvest worthwhile. I admit that I dislike TLH because it usually leads to a proliferation of funds.
One other added downside of TLH is it always leads to having to pay higher capital gains taxes later on. You are going to pay them one way or another. That is what I wrestle with as far as is it even worth it to just delay the tax man. :sharebeer
Not always because you may be in a 0% cap gains bracket or die and get stepped up basis for heirs. Better to defer taxes into the future and get the benefit now.
Yes, those statements are true. But in my case (and most cases IMHO) to really make this work it needs to be a long term holding. And they are not. This position will be completely liquidated in a couple of years and by TLHing I am delaying the tax man but not eliminating him. By selling now I would be able to match these losses up with other realized gains or deduct the loss amount from my income. But in a couple of years that would come back to get me as I would be paying more in gains as I liquidate the investment. I do realize I may make out by getting a lower tax rate then when I sell the investment and that is what I have to consider in this scenario.
Last edited by SquawkIdent on Sun Sep 23, 2018 11:09 am, edited 1 time in total.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by Artsdoctor » Sun Sep 23, 2018 8:54 am

^ Squawk,

Two things to consider. First, if you're thinking about TLH'ing an equity fund AND you're going to need to money in a couple of years, consider taking the money from elsewhere, such as a short-term bond fund or cash; putting aside money you'll in the near term in equities entails a bit of risk that might not be worth taking. Second, if you're uncomfortable TLH'ing a significant amount, consider TLH'ing just enough to deduct the $3,000 from your income over the next couple of years; your marginal tax rate on income will usually be more than your marginal rate on (long-term) capital gains.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by AlphaLess » Sun Sep 23, 2018 9:38 am

Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?

Thanks

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Re: Tax Loss Harvest (TLH) VWIUX

Post by SquawkIdent » Sun Sep 23, 2018 11:18 am

Artsdoctor wrote:
Sun Sep 23, 2018 8:54 am
^ Squawk,

Two things to consider. First, if you're thinking about TLH'ing an equity fund AND you're going to need to money in a couple of years, consider taking the money from elsewhere, such as a short-term bond fund or cash; putting aside money you'll in the near term in equities entails a bit of risk that might not be worth taking. Second, if you're uncomfortable TLH'ing a significant amount, consider TLH'ing just enough to deduct the $3,000 from your income over the next couple of years; your marginal tax rate on income will usually be more than your marginal rate on (long-term) capital gains.
This loss is from a muni bond fund. And will be completely liquidated in the coming years as the money is needed elsewhere and to aid in total portfolio adjustments. That is a consideration though to do a split transaction. TLH some of it and keep the rest of it invested in the original holding. Thanks.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by SquawkIdent » Sun Sep 23, 2018 11:21 am

AlphaLess wrote:
Sun Sep 23, 2018 9:38 am
Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?

Thanks
I'm not sure it says in there that it does that or not. But what I do know is that what VG does. The dividends are paid on a monthly basis and if you sell mid month you get prorated dividends for when you owned the fund during that month. So that would lead me to believe that the dividends are accrued daily. Maybe someone else can find the reference in their literature or call them tomorrow and ask them.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by PFInterest » Sun Sep 23, 2018 11:39 am

AlphaLess wrote:
Sun Sep 23, 2018 9:38 am
Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?

Thanks
its on page 48.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by blackburnian » Sun Sep 23, 2018 11:43 am

Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?
Alphaless: On p. 270 of the April 30, 2018 semiannual report on Vanguard Municipal Bond Funds, under "Notes to Financial Statements" for VWIUX, it say "Distributions from net investment income are declared daily and paid on the first business day of the following month. Annual distributions from realized capital gains, if any, are recorded on the ex-dividend date."

You can also look at the statutory prospectus (available online) for this or any other fund and search for the word "daily" and find it that way. To find the prospectus, click on the fund name in your account, then "overview," then "prospectuses and reports"

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Re: Tax Loss Harvest (TLH) VWIUX

Post by AlphaLess » Sun Sep 23, 2018 12:20 pm

SquawkIdent wrote:
Sun Sep 23, 2018 11:21 am
AlphaLess wrote:
Sun Sep 23, 2018 9:38 am
Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?

Thanks
I'm not sure it says in there that it does that or not. But what I do know is that what VG does. The dividends are paid on a monthly basis and if you sell mid month you get prorated dividends for when you owned the fund during that month. So that would lead me to believe that the dividends are accrued daily. Maybe someone else can find the reference in their literature or call them tomorrow and ask them.
Thank you.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by AlphaLess » Sun Sep 23, 2018 12:20 pm

PFInterest wrote:
Sun Sep 23, 2018 11:39 am
AlphaLess wrote:
Sun Sep 23, 2018 9:38 am
Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?

Thanks
its on page 48.
Thank you.

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Re: Tax Loss Harvest (TLH) VWIUX

Post by AlphaLess » Sun Sep 23, 2018 12:21 pm

blackburnian wrote:
Sun Sep 23, 2018 11:43 am
Can someone point out where in the Vanguard prospectus (for VWIUX and VWLUX) does it say that the dividend is: (a) daily-accured, and (b) monthly paid?
Alphaless: On p. 270 of the April 30, 2018 semiannual report on Vanguard Municipal Bond Funds, under "Notes to Financial Statements" for VWIUX, it say "Distributions from net investment income are declared daily and paid on the first business day of the following month. Annual distributions from realized capital gains, if any, are recorded on the ex-dividend date."

You can also look at the statutory prospectus (available online) for this or any other fund and search for the word "daily" and find it that way. To find the prospectus, click on the fund name in your account, then "overview," then "prospectuses and reports"
Thank you.

AlphaLess
Posts: 584
Joined: Fri Sep 29, 2017 11:38 pm

Re: Tax Loss Harvest (TLH) VWIUX

Post by AlphaLess » Sun Sep 23, 2018 12:34 pm

To recap the discussion here, we have the following Muni BOND funds offered by VG:

https://investor.vanguard.com/mutual-fu ... nd-returns

(Notice that the list DOES NOT include the money market muni funds).

In that list, we have the following categories (excluding all the state specific ones):

1. Short term, in investor,admiral pairs:
VWSTX, VWSUX

2. Limited term, in investor,admiral pairs:
VMLTX, VMLUX

3. Intermediate term, in investor,admiral pairs:
VWITX, VWIUX

4. Long term, in investor,admiral pairs:
VWLTX, VWLUX

All the bond funds listed above are daily-accrued, monthly paid dividends, which make it possible to do a usual 31-day TLH operations.

On the other hand, the funds below are NOT eligible for that type of tax loss harvest:

Z. Vanguard tax-exempt BOND INDEX fund:
VTEBX,VTEAX,VTEB
So don't use these funds, if you intend to do TLH.
Also note that the 'Z' category MUTUAL funds have a 0.25% purchase fee.

Is the above summary correct?

Also, if you wanted to see a quick summary / comparison of the fund categories (1,2,3,4, and Z), you can use this link:
https://investor.vanguard.com/mutual-fu ... nd-returns

Then check-mark those 5 categories, and click compare.
I don't think the comparison page I have has a direct-access URL, but you can easily navigate to that page yourself, by following the instructions above.

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