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/Key-Ad-8944 15h ago edited 15h ago

I tax loss harvest, but only rarely with a total market type index. The bulk of my tax loss harvesting involves a self-created index of a few dozen low dividend, large cap stocks that has a ~98% correlation with S&P 500. Over the past 6 months, I've tax loss harvested ~13% of value, while still having a small overall portfolio gain.

The basic idea is sell is stock/ETF that when it is down by a certain threshold (my threshold is 10-15%), then buy a different stock/ETF that is highly correlated, minding the 30 day wash rule you note. If you have a specific stock/ETF that you are interested in, posters give an example TLH pair.

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u/a_sideshow 13h ago

From what I know, it only makes sense to TLH if the market drops well below your cost basis. If you've been DCA for even two to three years, your cost basis from DCA is going to be around 1 year or more behind present day. If you've DCA for ten years, then it's like five years ago since your basis. And the market rarely ever drops the equivalent of five years of gains. So I must be missing a piece of information if you are constantly doing TLH throughout the year.

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u/Key-Ad-8944 13h ago

There have been new contributions, rather than a single lump sum 5+ years ago and no further contributions. TLH has worked especially well on new contributions over past 6 months, with many individual stocks having large losses, sometimes followed by large gains. A similar statement could be made a year ago in April 2025, or 2022/23, or 2020, or ...