5 ms·
That's not what it would do. Think about it. Edit to add color: If you hold 6 months, the hurdle rate would be ~5%. If you hold 18 months, it's ~15%. You can'
by sfblah 5y ago
That's not what it would do. Think about it.
Edit to add color:
If you hold 6 months, the hurdle rate would be ~5%. If you hold 18 months, it's ~15%. You can't avoid the tax by churning, unless you're phenomenally lucky at market timing. The hurdle rate isn't 10%. It's 10% per year. That makes a huge difference. There is no incentive to churn your holdings. Quite the contrary, as the percentage taxed at a lower rate goes up each year.
- refurb 5y agoPeople churn today because of tax incentives like tax-loss harvesting. If you think your return >10% in a year, sell, pay lower tax, rebuy and reset your tax basis. Repeat.
- sfblah 5y agoPeople do tax-loss harvest, but they're taking a risk because they have to stay out of the stock for 30 days, and during that time who knows what will happen. I'd be interested in a more concrete example of exactly how someone could do what you're saying to come out ahead. So far you just keep saying vague things. What exactly would someone do under my system to sidestep it?
- refurb 5y agoYou just purchase another stock right away that correlates or matches the one you sold. Sell Vanguard total market and buy Fidelity total market. No need to stay out of the market for 30 days.