Quick TLH check

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Hillview
Posts: 391
Joined: Fri Feb 02, 2018 7:27 am

Quick TLH check

Post by Hillview »

I think I am doing this right but it is my first time.
In a Roth I own VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares)
In my taxable account I currently own VLCAX (Vanguard Large Cap Index Fund Admiral Shares) and I want to TLH from this account. I have dividends sweeping into my money market account.

This account is <5% of my husband's and my joint holdings so I am not overly concerned but do want to do the right thing. I am trying to find a materially different equity to move my taxable funds into. Is VSMAX (Vanguard Small-Cap Index Fund Admiral Shares) a good option? Is there another option I should consider?

Thanks!
livesoft
Posts: 73353
Joined: Thu Mar 01, 2007 8:00 pm

Re: Quick TLH check

Post by livesoft »

If one assumes that you like your current asset allocation, then going from large-cap to small-cap would be changing that asset allocation. If you don't like your current asset allocation, then ....

So VLCAX to VFIAX is what many people would do. Why did you not consider this?

Also, what's with this "materially different" statement? You could go to VTIAX (total international stock market) and it would be materially different.

But to avoid a wash sale, one only need to avoid purchasing a "substantially identical" investment which is quite a bit different from a "materially different" investment.

Thus, I am not sure what your intentions really are.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
Hillview
Posts: 391
Joined: Fri Feb 02, 2018 7:27 am

Re: Quick TLH check

Post by Hillview »

livesoft wrote: Fri Dec 28, 2018 12:49 pm If one assumes that you like your current asset allocation, then going from large-cap to small-cap would be changing that asset allocation. If you don't like your current asset allocation, then ....

So VLCAX to VFIAX is what many people would do. Why did you not consider this?

Also, what's with this "materially different" statement? You could go to VTIAX (total international stock market) and it would be materially different.

But to avoid a wash sale, one only need to avoid purchasing a "substantially identical" investment which is quite a bit different from a "materially different" investment.

Thus, I am not sure what your intentions really are.
sorry I meant not "substantially identical" not materially different. I have a $1400 holding (for my son but in my name) of VOO (Vanguard S&P 500 ETF). My TLH amount is $13k (the value of this account is currently $138k) so that would wash but maybe since it is so small it is ok?

Sorry I didn't list the VOO in my original post and thank you for your response. You are a legend :)
livesoft
Posts: 73353
Joined: Thu Mar 01, 2007 8:00 pm

Re: Quick TLH check

Post by livesoft »

So VSMAX would not be "substantially identical" that's for sure since it is not US large-cap. VSMAX has underperformed total market and large-caps by more than 5% so far in 2018. If you want to buy low, then VSMAX is probably OK, but if you to maintain your existing asset allocation, then VSMAX is not going to be a good choice.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
Hillview
Posts: 391
Joined: Fri Feb 02, 2018 7:27 am

Re: Quick TLH check

Post by Hillview »

livesoft wrote: Fri Dec 28, 2018 1:09 pm So VSMAX would not be "substantially identical" that's for sure since it is not US large-cap. VSMAX has underperformed total market and large-caps by more than 5% so far in 2018. If you want to buy low, then VSMAX is probably OK, but if you to maintain your existing asset allocation, then VSMAX is not going to be a good choice.
Ok so that sounds like the wrong turn -- I am not very fluent in what options I should consider. Does moving to VFIAX and dealing with the relatively small wash result make the most sense or is there another non-substantially identical option I should consider? Thank you again for taking the time to respond. I know I sound very stupid.
livesoft
Posts: 73353
Joined: Thu Mar 01, 2007 8:00 pm

Re: Quick TLH check

Post by livesoft »

OK, I am going to suggest something radical. Exchange your VLCAX (US large cap) to an International Index fund of your choice. I cannot tell through the internet if you already have TLH'd an international fund or even if you own an international fund, but I will go on.

Then in your tax-advantaged accounts exchange an international fund to something US-total-market-y or US-large-cap-y.

You will have to list your choices.

But, it is NOT a wash sale to exchange VLCAX into VFIAX just because you hold VOO. You would have had to sell VOO at a loss in the past 30 days or in the next 30 days. Maybe you did, but it is not at all clear to me from this thread that you did that. If you haven't sold VOO at a loss, then you are good to go with VFIAX with the caveat that you should not sell VOO in the next 30 or so days either.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
PhysicianOnFIRE
Posts: 465
Joined: Fri Jan 08, 2016 3:46 pm
Location: Up North

Re: Quick TLH check

Post by PhysicianOnFIRE »

I'll jump in and say that the potential wash from a $1,400 stake in VOO is likely to be minimal. If the December dividend of about $7 was reinvested, you'll have a tiny partial wash sale if you were to TLH from VTSAX to VFIAX. I'm assuming you didn't purchase a substantial portion of the VOO in December.

VLCAX is also a good trading partner, and the expense ratio has come down from 0.09 to 0.05 in recent years.

Buying VSMAX low would also be a decent move if you want to introduce a small cap tilt to your portfolio. I would also consider a small cap value fund (VSIAX) if you are looking to tilt.

In other words, you've got options and none of them are bad.

:beer
-PoF
livesoft
Posts: 73353
Joined: Thu Mar 01, 2007 8:00 pm

Re: Quick TLH check

Post by livesoft »

Oh, I see VTSAX is owned in a Roth, so you won't be selling it to TLH, so the exchange from VLCAX to VTSAX will also not create a wash sale.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
Hillview
Posts: 391
Joined: Fri Feb 02, 2018 7:27 am

Re: Quick TLH check

Post by Hillview »

thank you both I went with VTSAX! I appreciate you both helping me!
Post Reply