Hello, I'm still learning about TLH but am looking for some guidance on how to proceed. I want to set myself up to tax-loss harvest before the end of the year, if the opportunity arises. Obviously, I want to reduce my taxable income this year because I had an large payout from my job this year that put my some of my taxable income into the 24% tax bracket. What would be the next recommended steps to TLH and possibly claim the max $3k realized loss for this year (assuming will markets go down)?
I own a small amount in my taxable brokerage account
Other accounts that I am still contributing to until the end of the year:
- SPAXX (Gov't Money Market a.k.a. Core Position) = $9.1k
- Roth IRA = FXIAX (Fidelity 500 Index Fund)
- 401k = VIIIX (Vanguard Institutional S&P 500 Index Trust)
- 401k BrokerageLink = FZROX (Fidelity Zero Total Market Index)
I've been reading past TLH posts and I've read the TLH wiki, but have a few questions that sway me to make a better decision on what I should do next. I know timing market is frowned upon, but I've been reluctant to invest the money in SPAXX during market highs like it is now, but a part of me thinks that in order to TLH, I need to continue investing. Even though my positions in taxable are small, my current FSKAX and VTI lots are green and it'd probably take another "March 2020 dip" or similar to put those lots in the red since these lots were purchased a while back. With the elections coming up, it makes my decision to put money in the volatile market a little harder. Nonetheless, should I throw my $9.1k into VTI and look out for TLH opportunities?
I plan to move another $10k+ into my taxable very soon as well for long-term investing purposes, so total in SPAXX can be as much as $19.1k very soon. Keeping a lot of money on the sidelines is not optimal, if I want to TLH I believe. What would you do in my position?
Also, I can easily change my future FZROX contributions in HSA and 401k to something else if folks think that wash sale rule may interfere with TLH. I feel it's pretty split on people thinking wash sales rules apply to accounts outside of taxable accounts and IRAs.
Please let me know other info can be useful. Thank you.