Tax Loss Harvesting help

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Opibus
Posts: 4
Joined: Tue Dec 10, 2019 1:15 pm

Tax Loss Harvesting help

Post by Opibus » Thu Feb 13, 2020 4:13 pm

Trying to figure out tax loss harvesting for my portfolio in Vanguard.

I decided on the following, and the possible TLH ETFs

VTI --> VOO (Total US stock)
VEA --> VGK (Developed Mkt Stocks)
VWO --> VPL (Emerging& Mkt Stocks)
VNQ --> VNQI (REITs)
BNDW --> BND + BNDI or VTEB (Bonds)

trying to figure out if I made good choices or if they're not good alternatives.

I suppose given the no commission trades now a days I could consider other ETFs from ishares or fidelity, etc.

aristotelian
Posts: 6814
Joined: Wed Jan 11, 2017 8:05 pm

Re: Tax Loss Harvesting help

Post by aristotelian » Thu Feb 13, 2020 4:26 pm

IMO the partners you have selected are too different from the original positions. You would be throwing off your allocation with much greater impact than the few dollars you will save in taxes. Look for ETF's representing the same sector but using different indices (iShares, Schwab, etc).

REIT probably shouldn't be held in taxable account so I would use any harvesting opportunity to get rid of it, replace with VTI and buy REIT in a retirement account if you still want it.

Topic Author
Opibus
Posts: 4
Joined: Tue Dec 10, 2019 1:15 pm

Re: Tax Loss Harvesting help

Post by Opibus » Thu Feb 13, 2020 4:31 pm

Thanks that's good to know.

I have more percentage REITs in Tax deferred accounts, but have a smaller percentage in the taxable account.

pepys
Posts: 133
Joined: Mon Nov 12, 2018 10:34 am

Re: Tax Loss Harvesting help

Post by pepys » Thu Feb 13, 2020 4:58 pm

Agree with aristotelian. Some of those are wildly different. Portfolio Visualizer might be a useful tool here. Here's VWO vs VPL vs something much more similar to VWO (Schwab Emerging Markets ETF, SCHE):

https://www.portfoliovisualizer.com/bac ... ion3_3=100

Looking at the annual returns, VWO and SCHE are extremely similar, whereas VPL is sometimes 20 points or more off.
"Give me enough leverage and a fund on which to place it, and I shall move the world." - Archimedes

MotoTrojan
Posts: 8156
Joined: Wed Feb 01, 2017 8:39 pm

Re: Tax Loss Harvesting help

Post by MotoTrojan » Thu Feb 13, 2020 5:01 pm

ITOT is a no-brainer swap for VTI; both are low cost and tax-efficient and maintain Total US.

VEA is trickier but if you are okay just holding Total International then VXUS - IXUS is a good combo. Are you overweighting EM?

mattsmith321
Posts: 8
Joined: Fri Jan 31, 2020 11:15 pm

Re: Tax Loss Harvesting help

Post by mattsmith321 » Fri Feb 14, 2020 11:12 am

pepys wrote:
Thu Feb 13, 2020 4:58 pm
Agree with aristotelian. Some of those are wildly different. Portfolio Visualizer might be a useful tool here. Here's VWO vs VPL vs something much more similar to VWO (Schwab Emerging Markets ETF, SCHE):

https://www.portfoliovisualizer.com/bac ... ion3_3=100

Looking at the annual returns, VWO and SCHE are extremely similar, whereas VPL is sometimes 20 points or more off.
In addition to using PV's Backtest Portfolio Asset Allocation mentioned above, PV also has an Asset Correlation feature. While it doesn't have a chart like the backtest that you can use to visually see how funds align, it does have a matrix that allows you to compare a number of different funds at a time and narrow down to the ones that are most correlated (or not correlated if that is your goal). One thing to note is that the correlation results will move around a little between funds as you add or remove the number of funds you are comparing. I haven't paid enough attention to figure out exactly why but just aware that sometimes it changes.

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