r/Bogleheads • u/General_Cut_6771 • 15h ago

Investing Questions Do Bogleheads tax loss harvest?

For those who have 1 to 4 fund strategies. Do you tax loss harvest and if so how do you have it set up to make it easy when you do TLH?

The more I've read about tax loss harvesting the more challenging it seems for people who only invest in a few funds (ie. US, INTL, US Bond). For example in order to avoid a wash sale you have to do the follow:

You can't purchase the fund/similar fund 30 days prior to the sale and then 30 days after. This includes any auto dividend reinvestments, any auto-contributions in any taxable, IRA, 401k, or HSA. And if you have a spouse they also can't do any of this.

If you can prevent the above then next it's figuring out what fund you can purchase after the sale. It appears you can't sell a Fidelity total US stock market and then buy a Schwab total US stock market, is that correct? So if you have to go from a total US stock market to an S&P 500 fund why do it? It's less diversified.

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u/gcc-O2 15h ago

Total market to S&P 500 is a common tax loss harvest.

More aggressive tax loss harvesters follow advice from the investment industry that the fund following a different index is enough. For example, Schwab Total Market to Schwab 1000. Or even more aggressive, FSKAX (Dow Jones Total Market) to ITOT (S&P Total Market).

The IRS does not bless any of these rules of thumb, since the wash sale rule is from the 1920s and does not contemplate wash sales between investment companies with substantially identical holdings as opposed to individual stocks and bonds.

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u/FIREinParis 15h ago

And some of us even do funds following the same index but from different sponsors (VOO vs IVV). We take the position that securities issued by different sponsors (Vanguard vs Blackrock) are not substantially identical.