THANK YOU for providing this content which I have not been able to find elsewhere. With 75% of my investments in a taxable equity portfolio, I’m keenly aware that trading stock is a ”tax drag”. But I’d like to move out of some positions and into indexes and pondering the tax implications.
MFEGX outperformed SCHG by 21% over the 12/17-12/21 period. A 4.8% CAGR. Was I better off taking 3% turnover for the increased return? Obviously not knowable in advance, but don’t let the tail wag the dog. High performance investments are a top priority.
Your data looks incorrect. SCHG outperformed MFEGX during this period as well as since SCHG inception. You are correct that outperformance can overcome the tax tail, but data shows north of 80% of active funds underperform over a 15-year time horizon (SPIVA Report).
Dude finally. Nowhere on the internet did i find that turnover of 100% means 15% less growth. Now i now what rough equivalents in turnover mean. Thanks
Wish I had turned over my portfolio just once in the last few years before I retired. 15% or even 18.8% would have been preferable to 15% + 4.7% IRMAA or eventually 15% + 21.25% SS tax.
so buy ETF's that don't pay out as much? What if someone has a large inheritance cash windfall, do you invest it now , or just get .005% from a money market fund? ugh, this isn't clear.
So what if I bought BRK-B as a value investment (which doesn't pay dividends), and SCHG which is a growth fund. Can I harvest tax loss by switching between these two completely different funds. When BRK-B goes down I sell for the tax loss and reinvest into SCHG. When SCHG goes down, sell to harvest taxes and reinvest in BRK-B. Would this is also cause large tax drags? Thanks.
Yes, this will not trigger a wash sale. We actually just released a video explaining this switching more in depth - ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-WurAjtgB4gk.html This being said, if you are selling at losses, there will not be a tax drag. But we would expect SCHG or BRK-B to rise over time. So now switching will generate gains and you will need to harvest those gains strategically. The one thing I would say here though is switching back and forth between a single value company and a diversified growth fund will carry some active investment risk.
@@SafeguardWealthManagement This is why I chose BRK-B. It completely owns around 260 companies and then invests in another 60-70 stocks. I use it as kind of a diversified value ETF fund without the management fee and no distribution of dividends. I would not put all of my nonqualified money in it, just certain portions when trying to harvest gains. I could be wrong, but that is my reasoning. I would not be trading in and out all day, every day, more as an option when there are large dips in the market and between BRK-B and SCHG.
So base for the first segments I see if I have q dividend portfolio reinvesting the dividends it’s not worthy because this action will create a taxable issue correct me if I am wrong thanks
Hypothetically if someone doesn’t need the income from RMD’s but they can’t put it back into a retirement account, would the next best option be putting the money into a taxable account, and then just following these rules for that account? Or is there a better option?
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