Retail investor: My $VOO is down bad. I want the tax loss but I don't want to be out of the market.


Me: So sell the $VOO... & buy $Q the same day.
Retail investor: Wait, isn't that a wash sale?
Me: Nope. VOO tracks the S&P, Q tracks the NASDAQ. The IRS doesn't call those substantially identical. VOO to SPY? THAT'S a wash sale. VOO to Q is clean.
Retail investor: So I bank the loss on paper... but I'm still fully invested during the dip?
Me: Yep... you harvested a tax loss AND you're still in the market for the rebound. Never sitting out when things are cheap.
Retail investor: Why does nobody explain it this simply?
Me: It's just one of those things... Talk to your CPA on specifics... but this is the move.
Don't sit out of a cheap market just to harvest a loss...
Sell the S&P fund, buy the NASDAQ fund. Loss banked, still invested.
The wealthy play the tax game all year... not just in April.
SPX-0.21%
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