Author Topic: sell high or be fancy?  (Read 2303 times)

scrubbyfish

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sell high or be fancy?
« on: January 12, 2016, 08:53:41 AM »
Every year, I move money from the disability trust I set up for me and my son (with my own money) to our four registered plans, to maximize each. This year I need to move $20,000.

I am allocated across all of my investment accounts combined per Canadian Couch Potato (basically 30/30/30 Canada, US, Int'l equities).
US is up, the other two are down.
I asked the trust's bank rep to sell $20,000 worth of the "up" one, and leave the two "down" ones as is.
Rep proposes fancy footwork instead:

Quote
Given the expectation for the market for the next year, I'd like to see more in the US fund. 

What I'm looking at is tax-loss selling and using the capital gain on the TDB661 to offset the loss on say, the RBF556 (Canadian Index) and NBC839 (Intl Index).  Here's my thought:

Sell ALL of the TDB661 to trigger the entire capital GAIN of approximately $1,000.  Then buy all but $4,000 of it back.
Sell $10,000 of the RBF556. this will trigger a capital LOSS of about $2,200
Sell $6,000 of the NBC839 this will trigger a capital LOSS $225

Capital gains are taxable in the year they are triggered, but can be offset by capital losses.  So for you this would mean $1,000 capital gain - $2,425 capital loss = net capital loss of $1425 (approximate).   This is NOT taxable and can be carried forward indefinitely to be used against any other capital gains to reduce your taxes in the future.

Your new allocation would the look more like this:

Canadian Equity                41%
Us Equity                             30%
International Equity        29%

1. There is enough in the "up" account to fund the full amount needed.
2. I aim for the CCP allocation across all accounts, such that it's irrelevant (I think) what the balance looks like within any one of them.
3. When I do so, I actually end up without about 30/30/30 Canada, US, Int'l equity, which is closer to rep's ideal anyway.

What do you think? Does it work just to "sell high" and rebalance across all accounts, or is it for some reason worth doing the fancy footwork the rep is recommending?

Kaspian

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Re: sell high or be fancy?
« Reply #1 on: January 12, 2016, 01:05:50 PM »
I am allocated across all of my investment accounts combined per Canadian Couch Potato (basically 30/30/30 Canada, US, Int'l equities).
US is up, the other two are down.

Why is your International down with CCP?  Dan posted results yesterday:

TD International Index e (TDB911)  18.90%
Vanguard FTSE Global All Cap ex Canada (VXC) 17.04%

The one you mention:
NBC839   1 Year   11.96% 

But I'm with you on the main question--some people go bonkers over taxes versus the big picture.  Do all that stuff to save yourself maybe $200 in the future (some untold date)?  Nah...  I've seen lots of people lose out in general because they've been so concerned with shifting things around to avoid taxes that they miss gains, complicate chosen funds, create new unnecessary accounts, etc.  CCP (and passive investing as a whole) is supposed to keep your life as simple as possible.  :)

Heckler

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Re: sell high or be fancy?
« Reply #2 on: January 12, 2016, 01:18:25 PM »
VXC is lower now than it was Jun-Aug, so you'd have to holding it since Jan 1 for 365 days to get the reported 1 yr return.  Same as my XEF, which fared much better than my wifes XEF bought 4 months later.

Time in the market...

OkieStache

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Re: sell high or be fancy?
« Reply #3 on: January 12, 2016, 03:32:48 PM »
There may be a legitimate reason for fancy footwork, however every time I hear that suggestion I wonder if that doesn't translate to "I will make more money on loads/commission if we sell and re-buy."

scrubbyfish

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Re: sell high or be fancy?
« Reply #4 on: January 12, 2016, 03:40:42 PM »
Why is your International down with CCP?

Yeah, just what Heckler said. I don't remember when I finalized most of my investment moves, but I think maybe the earliest was spring, and I added different amounts at different points after that. I saw those CCP results yesterday and was relieved when I found the CPP caveat in the comments section re: what can make this number lower. (However, my overall strategy brought results comparable enough to the CCP one-year.)

I probably have no personal taxes dues, or even Corporate ones this year. Banker knows that taxes are a very minimal concern for me, so I think her main interest is seeing me with a higher percentage in the US, but I do have that when we look at my entire portfolio vs the part she has a role in.

Okay. Thanks, Kaspian, Heckler, and OkieStache :)

Heckler

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Re: sell high or be fancy?
« Reply #5 on: January 12, 2016, 03:46:24 PM »
There may be a legitimate reason for fancy footwork, however every time I hear that suggestion I wonder if that doesn't translate to "I will make more money on loads/commission if we sell and re-buy."

I was thinking the same.

2Birds1Stone

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Re: sell high or be fancy?
« Reply #6 on: January 12, 2016, 03:49:47 PM »
There may be a legitimate reason for fancy footwork, however every time I hear that suggestion I wonder if that doesn't translate to "I will make more money on loads/commission if we sell and re-buy."

I was thinking the same.

Yup!