Year End Tax Harvesting

I always end up waiting until the last minute, and this year is no exception. I took a quick scan of my portfolio yesterday and decided to sell a couple holding that we had significant paper loss on to harvest some tax losses before the end of 2011.

I'm happy owning what investments we have now, but all things being equal it makes more sense to sell these holdings with significant unrecognized losses and invest the proceeds in an equivalent or peer investment so we can gain the immediate benefit of the tax loss.

I ended up selling our investment holdings in Radian (RDN) and a portion of our holdings in Dryships (DRYS). Both of these stocks have been very volatile this year and our average cost basis for each holding is significantly higher than the current market value. We only sold our early investments in Dryships and continue to hold our more recent purchases which have a much lower cost basis.

As far as the proceeds I'm thinking we will just invest those in the Vanguard Total Market Index (VTI) for now.

Happy Holidays!

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Comments (2)


Just wanted to bring up the issue of bonds again just in case the readership was not familiar with a relatively new bond investment called a "fixed maturity bond ETF or fund". This behaves like an index ETF or fund that tracks bonds and pays out interest but is different from a fund/ETF in that it has a fixed maturity date, ensuring that you will recoup your pincipal. In otherwords, it combines the best of both worlds and is also cheap, as you only pay a small commission through your broker to buy or sell. One example is a fixed maturity corporate bond fund (symbol=BSCH) that pays out a 3.5% annual dividend. For those seeking safety and a higher return than the 1% savings account rate, check this out. Also, don't forget gov't I-bonds, which are inflation indexed and now paying 3% (plus tax exempt).

Other Fixed-Maturity Bond ETFs in case anyone is interested: Guggenheim Bulletshares Bond ETFs with fixed maturity dates, enabling return of principal when the ETF liquidates in that given year. They also have fixed-maturity bond ETFs that invest in a basket of junk bonds.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
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