Tax-loss harvesting and ETF investing

[Windsurfer]

10% cash is not a big deal.. if you think about it, if you got a 50/50 balance fund --50% of the fund is in a bond index that probably generates 1 to 2% interest. in a bank, you probably get .1% over time, it's a big dealer but if you're talking about 1 to 2 yr time frame, it's not very large difference.
i used to work in a trading group as a programmer.. chances of a human trading against a human is low. in fact, most human trades are consider dumb/easy money. firms pay for order flow from retail clients. all big/serious trades are done via computer programs that spread it over time with multiple exchanges and through various strategies.

I think of it the same way. Any small amount of cash can be termporarily thought of as part of the non-stock portion of the overall portfolio, since the return on the non-stock portion is going to be low anyway, and cash can't go down in value. You've got time to figure out how to deploy some or all of the cash in something that is stock-based if needed to get the overall asset allocation back to your target percentage.

[spotty_dog]

Yeah, I always think of my cash as part of my fixed-income allocation. I guess going from 70/30 (my preferred allocation) to 60/40, and from 14% foreign to 4%, is just a huge leap along the risk/return spectrum from my perspective.

But what the heck. Shit or get off the pot, right? I'll put the order in to sell Monday, hopefully I'll be back into balance by the end of the week and hopefully I won't miss more in gains than I make in tax reductions.

[spotty_dog]

Done. Not gonna lie, I'm feeling a little queasy. Biggest financial transaction of my life.

[spotty_dog]

Finally settled last night. Went ahead and bought again. OMG so much money. But it's done now. Well, if it fills.

[metroguy]

you know.. you can sell and buy it at the same day right? assuming they both follow the same settlement rules, you don't have to wait until the trade settles.

[spotty_dog]

I can buy mutual funds with unsettled cash from selling mutual funds, but not ETFs. Pretty sure. Anyway, they both filled today. PHEW!

[metroguy]

i'm pretty sure etf is 3 day settlement which should be slower than mutual fund settlement. so if you sold mutual funds - it should settle on the same day--so you should be able to buy right away. now if you sold an etf and try to buy a mutual fund-- that might be a slight issue. you can probably just ask vanguard or fidelity the question..

[spotty_dog]

Right, that's what I found out about the settlement period for stock/ETF vs. mutual funds, it's about 3 days vs. 1 day. The way it worked for me was the mutual fund sale went through at the close of market Monday. So it took about 24 hours to settle, and I was able to place my buy order at market's open Wednesday. One ETF filled immediately, the other took a few hours, but both orders were filled by the end of Wednesday. And they hadn't settled by the weekend, but that part doesn't really matter since I plan to hold .

I think at my broker you can buy with unsettled cash if you have a margin account? Still need to figure those rules out I guess -- I'm not usually a frequent trader like this.

[metroguy]

thinking like an accountant.. (as a former accountant--that how i would think too)
i don't you didn't need to wait.. in your case, you sold mutual fund - settle on 1 day. you bought etf - settle 3 days.. there's no margin issues since you would have the cash on day 2 - and by the time etf settle on day 3--your cash would have +1 day in interest.. so no need to wait 1 day.. everything could have been done on the same day.