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Comment by dragontamer | Hacker News Reader

> rebalancing

Vanguard Target Date funds rebalance automatically.

> including asset selection

Vanguard's asset selection is "literally buy everything on the market". Its a dumb strategy, but it seems to work. In particular, Vanguard's total market index will perform by definition the average (minus Vanguard's very low fees).

> how to manage taxes

Its no harder than Betterment. You get a 1099-DIV next year, and then fill out your taxes. Since Vanguard Target Date funds automatically rebalance and everything, its unlikely that you get any benefits from Betterment.

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How much money do you have in Vanguard? I guarantee you will save from TLH if you have assets north of $1M. My annual tax burden has been reduced by 6 figures each year due to taking losses intelligently.

How? There's a $3000 cap on THL against regular income and capital gains is only taxed at 15%. $1M in realized capital gains is a pretty extraordinary circumstance.

The cap is on deductions from regular income if you have a capital loss for a year.

So if you have $50,000 in capital gains and $53,000 in capital losses, your gains are "free". And you can deduct the extra $3k from ordinary income.

You can also carry capital losses forward each year.

Yeah. If you have $50,000 in gains but $53000 in losses, then that's called a bad year.

You still aren't getting around the fact that you made a crappy investment somewhere to generate that loss.

Every portfolio has a mix of gains and losses if it's well diversified. I have gains that offset the losses elsewhere, but a reasonable chunk of those gains is offset by losses realized in parts of the portfolio that didn't do so well.

If you have a diversified portfolio that is all gains, I think you're probably not actually diversified.

Vanguard total market.

Diversified, but generally speaking it gains every year.

And no. Your portfolio is not as diverse as the entire market. Period.

Of course it isn't. But which market?

Anyway, we are talking past each other.

That's not really how tax loss harvesting works. You can have a portfolio that's up a total of $50k and _still_ have $50k in losses.

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