Betterment to VTSAX

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Topic Author
lolsen1187
Posts: 3
Joined: Wed Nov 07, 2018 7:32 am

Betterment to VTSAX

Post by lolsen1187 » Mon Feb 11, 2019 7:31 pm

Hello,

In an effort to consolidate assets, I've been closing various individual brokerage accounts and transferring funds to Vanguard (buying 100% VTSAX). This has raised a few questions that I'd like to get other opinions on.

1. I have a Betterment account that is set up with a 90/10 stock/bond allocation. This portfolio is currently down ~4% from my initial basis. I'd like to sell this portfolio and use all the funds to purchase VTSAX. I am hestitant to sell at a loss. My question is, does it make sense to wait around for the Betterment account to increase, sell, and invest in VTSAX, or is it smarter to just lock in my losses (harvest), and buy VTSAX?

and

2. I have set-up VTSAX auto-buys every two weeks (pay-day) to avoid buying too many shares at a fixed price. With the cash coming from my consolidation efforts, should I also space out my VTSAX purchases or just do one "lump-sum" buy? (I'm talking in the 5 -15k range so nothing huge) (also understanding that there is no predicting the market, I just would like to understnad the pros and cons of dollar cost averaging vs. a one-time buy).

If you've gotten this far, thank you so much for reading this and have a wonderful day.

Cheers!

livesoft
Posts: 64954
Joined: Thu Mar 01, 2007 8:00 pm

Re: Betterment to VTSAX

Post by livesoft » Mon Feb 11, 2019 7:40 pm

It is always good to sell for a loss and buy something similar. VTSAX is probably also down about 4%, but I didn't check. Some of your 4% down at betterment is probably due to some foreign equities having lost some money. But I would not hesitate to sell for loss. You might look up Loss Aversion: https://www.bogleheads.org/wiki/Behavioral_pitfalls

I recommend you just lump sum and if VTSAX drops, so what? Investing is all about losing money in order to make money.

And two more things: In a taxable account, you know what wash sales are? And you know how to fill out your tax return, right?
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MotoTrojan
Posts: 3099
Joined: Wed Feb 01, 2017 8:39 pm

Re: Betterment to VTSAX

Post by MotoTrojan » Mon Feb 11, 2019 7:43 pm

livesoft wrote:
Mon Feb 11, 2019 7:40 pm
It is always good to sell for a loss and buy something similar. VTSAX is probably also down about 4%, but I didn't check. Some of your 4% down at betterment is probably due to some foreign equities having lost some money. But I would not hesitate to sell for loss. You might look up Loss Aversion: https://www.bogleheads.org/wiki/Behavioral_pitfalls

I recommend you just lump sum and if VTSAX drops, so what? Investing is all about losing money in order to make money.

And one more thing: In a taxable account, you know what wash sales are? And you know how to fill out your tax return, right?
As long as Betterment doesn’t have VTSAX or VTI at aloss I agree, sell and buy it all tomorrow. You will create awash sale if Betterment includes these at a loss, as livesoft is noting.

strafe
Posts: 865
Joined: Sat Mar 03, 2007 12:49 pm

Re: Betterment to VTSAX

Post by strafe » Mon Feb 11, 2019 7:45 pm

I would sell, lock in the loss and buy the Total Stock Index in one fell swoop. I would not view this as a major change in portfolio composition. Be aware of any wash sale limitations if your Betterman account holds the ETF version of VTSAX.

Whether 100% Vanguard Total Stock Index is the optimal choice for you is a separate discussion.

livesoft
Posts: 64954
Joined: Thu Mar 01, 2007 8:00 pm

Re: Betterment to VTSAX

Post by livesoft » Mon Feb 11, 2019 7:46 pm

Since auto-buys of VTSAX have apparently already happened, I would not be surprised if a wash sale at Betterment has already happened, too. But wash sales are not illegal and not something to be very worried about.
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bg5
Posts: 52
Joined: Mon Jan 15, 2018 11:07 am

Re: Betterment to VTSAX

Post by bg5 » Mon Feb 11, 2019 8:33 pm

I love VTSAX......100% of my retirement is in this fund and I have decided to keep things simple and invest in 1 fund. Best of luck!

lostdog
Posts: 1448
Joined: Thu Feb 04, 2016 2:15 pm

Re: Betterment to VTSAX

Post by lostdog » Tue Feb 12, 2019 9:59 am

VTSAX is a fine fund but your missing out on a lot of great companies outside of the U.S. 7,000+ companies.


Royal Dutch Shell plc
Nestle SA
Tencent Holdings Ltd.
Samsung Electronics Co. Ltd.
Novartis AG
Roche Holding AG
Taiwan Semiconductor Manufacturing Co. Ltd.
HSBC Holdings plc
Alibaba Group Holding Ltd.
Toyota Motor Corp.

What if the next Apple is an international company?
100% VTWAX

Topic Author
lolsen1187
Posts: 3
Joined: Wed Nov 07, 2018 7:32 am

Re: Betterment to VTSAX

Post by lolsen1187 » Tue Feb 12, 2019 11:39 am

Thank you all for your replies. I do not fully understand wash sales. I did look into the Betterment holdings and VTSAX isn't among them for my 90/10% portfolio. It does contain VTI ETF and a few other Vanguard fuds that may be considered "relevant or equivalent" funds. However, because this is a relatively small sum (~5k), does the wash sale really matter? Also, wouldn't this be included on a 1099 for tax purposes or am I responsible for calculating the new cost basis for the loss?

Also, becuase I'm fairly new to investing, VTSAX seems like a highly recommended fund for simplicity and to capture the entire US market. It seems a popular suggestion to include an international index fund (20% of portfolio) to capture rest of world market.

Thank your quick response, it seems like the consensus is to sell the Betterment and quickly buy VTSAX in one fell swoop.

Cheers,

LO

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