Tax Loss Harvesting (TLH) opportunities

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Copernicus
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Tax Loss Harvesting (TLH) opportunities

Post by Copernicus » Sat Aug 18, 2018 3:41 pm

Where do you get your TLH opportunities, and does TLH benefit count for any significant return in your portfolio? I have not found sufficient TLF opportunities to the the concept very seriously.
The market has been in a general up trend, most Bogleheads invest for the long term, hold only a few asset classes, the assets exclusively in tax deferred accounts do not count for TLH, BHeads rebalance periodically, but not frequently. So, is TLH any significant factor in your portfolio performance?

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Artsdoctor
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Re: Tax Loss Harvesting (TLH) opportunities

Post by Artsdoctor » Sat Aug 18, 2018 3:48 pm

Copernicus wrote:
Sat Aug 18, 2018 3:41 pm
Where do you get your TLH opportunities, and does TLH benefit count for any significant return in your portfolio? I have not found sufficient TLF opportunities to the the concept very seriously.
The market has been in a general up trend, most Bogleheads invest for the long term, hold only a few asset classes, the assets exclusively in tax deferred accounts do not count for TLH, BHeads rebalance periodically, but not frequently. So, is TLH any significant factor in your portfolio performance?
Yes, there will most likely be a little variation in your performance, but probably not significant.

For example, you might TLH from Total Stock Market Index into the S&P 500 fund; if large caps outperform small caps, you might come out ahead. However, it could just as easily go the other way.

Likewise, I might easily TLH out of the National Intermediate-Term Tax-Exempt fund into the CA Intermediate-Term Tax-Exempt fund. The pre- and post-tax returns may be a little different but not appreciably.

TLH opportunities this year so far have been on the international equity side but you have more than 4 months left in the year.

While Bogleheads might indeed invest for the long-term, we'd also not pass up an opportunity to delay, or avoid, capital gains taxes if possible.

jebmke
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Re: Tax Loss Harvesting (TLH) opportunities

Post by jebmke » Sat Aug 18, 2018 4:43 pm

The best TLH opportunities come when the market tanks - which it inevitably will. You will likely get a chance to harvest losses ranging from 25-50% of your total equity holdings depending on how long you have been accumulating.

My losses from 2008-09 were enough to allow me to rebalance with no tax effect for ~7 years.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Random Walker
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Re: Tax Loss Harvesting (TLH) opportunities

Post by Random Walker » Sat Aug 18, 2018 5:45 pm

From what I remember, good TLH can add about 0.5-0.7% annualized to a portfolio. Need to use specific lot basis HIFO accounting. I’m not compulsive enough to do that. This is one reason I ultimately chose to use a financial advisor. I remember reading this in a couple of papers by Arnott and Berkin that made sense to me. Below is a link to one. Try searching the web for their other(s) on the subject.

https://www.firstquadrant.com/system/fi ... vestor.pdf

Dave

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Earl Lemongrab
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Re: Tax Loss Harvesting (TLH) opportunities

Post by Earl Lemongrab » Sun Aug 19, 2018 2:53 pm

I was smart enough to develop my portfolio, including investing a chunk of cash in taxable, right before the 2008 crash. This provided some excellent opportunities to do massive TLH over the next few years. So I banked five figures worth of losses to dole out at 3k/year.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

PFInterest
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Re: Tax Loss Harvesting (TLH) opportunities

Post by PFInterest » Sun Aug 19, 2018 2:54 pm

Copernicus wrote:
Sat Aug 18, 2018 3:41 pm
Where do you get your TLH opportunities, and does TLH benefit count for any significant return in your portfolio? I have not found sufficient TLF opportunities to the the concept very seriously.
The market has been in a general up trend, most Bogleheads invest for the long term, hold only a few asset classes, the assets exclusively in tax deferred accounts do not count for TLH, BHeads rebalance periodically, but not frequently. So, is TLH any significant factor in your portfolio performance?
you get them when the market tanks.
it is not insignificant. but not significant. im only at about 2-3K this year.
so no.

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