Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

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ronin561
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Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by ronin561 »

Please I do not want this to turn into a Domestic vs International debate. I have no trouble buying, holding and not panic selling. I am around 15-20% international for awhile now having just picked that number from the numerous posts about US/exUS ratios when I started. Never really been a fan and am wondering if it makes sense to sell the international in my taxable (about 35k) while it is basically down to where it is breaking even, and just putting it into more VTI/VTSAX while it is down as well? I hold some VEA in retirement account which I don't mind, but am looking to get out of the total international specifically in taxable.

thx
Tamalak
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by Tamalak »

It doesn't matter whether VXUS or VTI or both is down. The question is not when to get out of VXUS but why? Is it good reasons like currency volatility, or bad reasons like recent underperformance?
GhostOfBogle
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by GhostOfBogle »

ronin561 wrote: Mon May 16, 2022 11:03 am Please I do not want this to turn into a Domestic vs International debate. I have no trouble buying, holding and not panic selling. I am around 15-20% international for awhile now having just picked that number from the numerous posts about US/exUS ratios when I started. Never really been a fan and am wondering if it makes sense to sell the international in my taxable (about 35k) while it is basically down to where it is breaking even, and just putting it into more VTI/VTSAX while it is down as well? I hold some VEA in retirement account which I don't mind, but am looking to get out of the total international specifically in taxable.

thx

That’s exactly what I did. Got tired of holding what felt like an anchor in my portfolio and I no longer see a need for VXUS when US markets and international are around 90% correlated, except international falls harder and rises less. The 4000 stocks in VTI is a good enough sample size.
mega317
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by mega317 »

But VEA is international, and in taxable you get foreign tax credit. So what is the problem with international in taxable?
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by samsoes »

mega317 wrote: Mon May 16, 2022 11:31 am But VEA is international, and in taxable you get foreign tax credit. So what is the problem with international in taxable?
Unpredictable foreign tax credit and corresponding unpredictable increase in dividend income which can push one over the ACA MAGI cliff. These amounts are not known until the 1099 is received.

(I understand that the aforementioned cliff doesn't apply this year.)
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ronin561
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by ronin561 »

mega317 wrote: Mon May 16, 2022 11:31 am But VEA is international, and in taxable you get foreign tax credit. So what is the problem with international in taxable?
I want out of total international. edit: and now seems a good time to do it since I wont realize gains, and can throw more to US while it is down. I switched from VXUS to VEA in retirement as I am more comfortable with developed and no problem switching in tax sheltered acct.
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ronin561
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by ronin561 »

Tamalak wrote: Mon May 16, 2022 11:08 am It doesn't matter whether VXUS or VTI or both is down. The question is not when to get out of VXUS but why? Is it good reasons like currency volatility, or bad reasons like recent underperformance?
For my personal investing timeline and trying to hit earlyish retirement I do not have faith in exUS. I have read probably every post and every thread and all the back and forth, and if I was 20yrs old, I would probably stick it out. But being mid-40s I just don't see it. That is just my opinion. I was hoping to not have this turn into a US/exUS debate though.
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UpsetRaptor
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by UpsetRaptor »

Conceptually, it doesn't generally make any sense to wait to move into your desired asset allocation, regardless of whether the assets you're moving out of are currently up, down, or sideways. Ditching international is no different than ditching a different asset class or even an individual stock - if you wish to bail, there's no general theoretical reason to wait on it to be up or down before doing so. Any exception would be specific to your situation- e.g. if selling now triggered gains that caused specific tax consequences for you like a tax credit cliff missed. If you're selling at a wash, that's a non-issue.

BTW, not your fault OP because it's not what you asked, but there's zero chance this doesn't turn into another US vs exUS debate.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by pasadena »

I'm not sure what the question is? If you want to get rid of International, then yes, it makes sense to sell it, and since you can avoid CG taxes on the sale, now is probably a good time. Whether it makes sense to change your AA is another can of worms, and you specifically asked not to address that.

I did that myself - sold all international in taxable (and bought more in my 401(k) as I didn't want to change my AA, but merely wanted to relocate it).
mega317 wrote: Mon May 16, 2022 11:31 am But VEA is international, and in taxable you get foreign tax credit. So what is the problem with international in taxable?
If you're above the 25% tax bracket or so, the foreign tax credit doesn't cover the tax on dividends. That was my situation before I decided to relocate my International to my 401(k).
Last edited by pasadena on Mon May 16, 2022 12:27 pm, edited 1 time in total.
livesoft
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by livesoft »

Sure, I've got no problem with exchanging VXUS into VTI for you. I would not even ask this forum about doing such a move.
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drk
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by drk »

UpsetRaptor wrote: Mon May 16, 2022 11:56 am BTW, not your fault OP because it's not what you asked, but there's zero chance this doesn't turn into another US vs exUS debate.
It seems like the OP asked for the board's permissions to make a portfolio change based solely on performance-chasing, so it all but invited yet another endless series of ranters talking past each other debate.

OP: It's not clear what you hoped to get out of this question, but it's your portfolio, so you don't need anyone's blessing to make a change that you've already decided to make.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by donaldfair71 »

ronin561 wrote: Mon May 16, 2022 11:54 am
Tamalak wrote: Mon May 16, 2022 11:08 am It doesn't matter whether VXUS or VTI or both is down. The question is not when to get out of VXUS but why? Is it good reasons like currency volatility, or bad reasons like recent underperformance?
For my personal investing timeline and trying to hit earlyish retirement I do not have faith in exUS. I have read probably every post and every thread and all the back and forth, and if I was 20yrs old, I would probably stick it out. But being mid-40s I just don't see it. That is just my opinion. I was hoping to not have this turn into a US/exUS debate though.
I'm not sure how the question can be answered/approached without making it about US/exUs.
aristotelian
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by aristotelian »

It makes sense if you have perfect knowledge of the future. If not, usually the rational choice is to diversify when you have assets with the same expected return. Usually you would want to take more risk only with the expectation of return.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by secondopinion »

drk wrote: Mon May 16, 2022 12:05 pm
UpsetRaptor wrote: Mon May 16, 2022 11:56 am BTW, not your fault OP because it's not what you asked, but there's zero chance this doesn't turn into another US vs exUS debate.
It seems like the OP asked for the board's permissions to make a portfolio change based solely on performance-chasing, so it all but invited yet another endless series of ranters talking past each other debate.

OP: It's not clear what you hoped to get out of this question, but it's your portfolio, so you don't need anyone's blessing to make a change that you've already decided to make.
Replacing out VXUS in the taxable for VEA/VWO in the retirement account is not exactly performance chasing, or even just replacing it for VEA. Otherwise, I would agree.

I use VEA in my retirement accounts over VXUS; if the country actually meets the reasonable guidelines set, then I have no problem holding them as VEA will do so. I look at VEA as a S&P 500-type selection of international stocks (country-wise, that is, not literally the companies themselves). If the OP feels this is better long-term for themselves concerning international, it is better to do it now and hold it a very long time.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by drk »

secondopinion wrote: Mon May 16, 2022 12:20 pm Replacing out VXUS in the taxable for VEA/VWO in the retirement account is not exactly performance chasing, or even just replacing it for VEA. Otherwise, I would agree.
Neither of those options were suggested in the OP.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by Corvidae »

ronin561 wrote: Mon May 16, 2022 11:03 am I hold some VEA in retirement account which I don't mind, but am looking to get out of the total international specifically in taxable.
So buy more VEA in your retirement account when you sell VXUS in taxable. If you don't want to do that, then your actual question is US vs. ex-US.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by secondopinion »

drk wrote: Mon May 16, 2022 12:25 pm
secondopinion wrote: Mon May 16, 2022 12:20 pm Replacing out VXUS in the taxable for VEA/VWO in the retirement account is not exactly performance chasing, or even just replacing it for VEA. Otherwise, I would agree.
Neither of those options were suggested in the OP.
Then your claims are probably right. As I stated, I do agree if neither of my options are followed.
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by UpsetRaptor »

drk wrote: Mon May 16, 2022 12:05 pm
UpsetRaptor wrote: Mon May 16, 2022 11:56 am BTW, not your fault OP because it's not what you asked, but there's zero chance this doesn't turn into another US vs exUS debate.
It seems like the OP asked for the board's permissions to make a portfolio change based solely on performance-chasing, so it all but invited yet another endless series of ranters talking past each other debate.

OP: It's not clear what you hoped to get out of this question, but it's your portfolio, so you don't need anyone's blessing to make a change that you've already decided to make.
Well, beginners often have a line of thinking, when looking at a target allocation they desire, that they should wait until, say, a current stock they're holding turns into a winner before making the move. Which is obviously a fallacious line of thought, and what seems like the OP was asking about, just with international instead of an individual stock.
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Mr. Potter
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by Mr. Potter »

FWIW I TLH my international to US-TSM during the Covid dip. I did replace my international allocation using my tax advantage accounts. Not really sure what your question is but I have no argument with anyone who wants to dump international, I occasionally have to convince myself to hold it, my reason is simple, people a lot smarter than myself hold it, how’s that for sound reasoning?
FIREyourself
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by FIREyourself »

Just stay the course.
1/3 VTI | 1/3 VXUS | 1/3 BND
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by truenorth418 »

samsoes wrote: Mon May 16, 2022 11:36 am
mega317 wrote: Mon May 16, 2022 11:31 am But VEA is international, and in taxable you get foreign tax credit. So what is the problem with international in taxable?
Unpredictable foreign tax credit and corresponding unpredictable increase in dividend income which can push one over the ACA MAGI cliff. These amounts are not known until the 1099 is received.

(I understand that the aforementioned cliff doesn't apply this year.)

I am also doing this, for many of the same reasons - including the ACA MAGI impact post 2022 - although my plan is to take international down to 20% ultimately.
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ronin561
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by ronin561 »

Thanks everyone. Maybe main issue is not wanting the "total" international fund. And I have conditioned myself to not sell low, not panic sell, and just hold, but have never been happy with the total int, and with the current market drop I have what seems like an out to swap funds and was looking for outside input if it would be a bad move. Thank you for taking time to reply. I'm going to sell it and move funds.
jvini
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by jvini »

Bogleheads diversify. John Bogle didn't believe in foreign stocks. How's that for an internal struggle?
I'd switch into IVV. Using the portfolio visualizer may help. I've held about 8% international stocks for decades and I wish I didn't. I believe in diversification, but more between stocks and bonds. Also, globalization seems to be taking a bit of a hit and I think the U.S. is poised to do better if that happens. End of the day, you'll hear a million reasons for each side so you just have to choose.
Tamalak
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by Tamalak »

Yesss capitulate. Let me pick up VXUS for even cheaper. When it starts making money in 2040 I'll have the last laugh!
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by pasadena »

ronin561 wrote: Mon May 16, 2022 1:13 pm Thanks everyone. Maybe main issue is not wanting the "total" international fund. And I have conditioned myself to not sell low, not panic sell, and just hold, but have never been happy with the total int, and with the current market drop I have what seems like an out to swap funds and was looking for outside input if it would be a bad move. Thank you for taking time to reply. I'm going to sell it and move funds.
Well, you're replacing it with another fund that is also way down, so the "don't sell low" argument is kind of moot.
livesoft
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by livesoft »

VTIAX as of last Friday had YTD return of -15.0%
VTSAX as of last Friday had YTD return of -16.5%

So exchanging VXUS to VTI is a legit sell high, buy low move. :twisted:
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jvini
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Re: Taxable acct. sell VXUS low to buy VTI low make sense? Dumping international.

Post by jvini »

livesoft wrote: Mon May 16, 2022 2:13 pm VTIAX as of last Friday had YTD return of -15.0%
VTSAX as of last Friday had YTD return of -16.5%

So exchanging VXUS to VTI is a legit sell high, buy low move. :twisted:
That's what I heard from people 10 years ago. Maybe 20. I wish I ignored it.
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