I love when markets are down because not only is it a great time to buy long term index tracking ETF’s, it’s also an opportunity to save money on your taxes through a strategy called tax loss harvesting. If you do not know what tax loss harvesting is, I explain what it is and how to use it in this video HERE.
In order to effectively implement a tax loss harvesting strategy, you must swap out your ETFs that are in the red for ETF’s that have similar price behavior but are different in terms of how the ETF is constructed. Below, I have listed some equity and bond ETF pairs that work well for tax loss harvesting. However, there are plenty of other ETF pairs to choose from so if you are holding other ETF’s that are not on this list, just look for another ETF that has similar price movement but has a different number of holdings and tracks a completely different index.
|
Primary ETF |
Secondary ETF |
|
Large Cap ETF’s |
Large Cap ETF’s |
| SCHX (Schwab U.S Large Cap) | VOO (Vanguard S&P 500) |
| SCHG (Schwab U.S. Large Cap Growth) | VUG (Vanguard Growth ETF) |
| SCHV (Schwab U.S. Large Cap Value) | VTV (Vanguard Value Index) |
| VYM (Vanguard High Dividend Yield) | SCHD (Schwab U.S. Dividend Equity) |
|
Mid Cap ETF’s |
Mid Cap ETF’s |
| SCHM (Schwab U.S. Mid Cap) | VO (Vanguard Mid Cap Index) |
| VOT (Vanguard Mid Cap Growth) | IJK (iShares S&P Mid-Cap 400 Growth) |
| VOE (Vanguard Mid Cap Value) | IJJ (iShares S&P Mid-Cap 400 Value) |
|
Small Cap ETF’s |
Small Cap ETF’s |
| SCHA (Schwab U.S. Small Cap) | VB (Vanguard Small Cap) |
| VBK (Vanguard Small Cap Growth) | IWO (iShares Russell 2000 Growth) |
| IJS (iShares S&P Small-Cap 600 Value) | VBR (Vanguard Small Cap Value) |
|
International ETF’s |
International ETF’s |
| VXUS (Vanguard Total International Stock) | IXUS (iShares Core MSCI Total International Stock) |
| SCHE (Schwab Emerging Markets Equity) | IEMG (iShares Core MSCI Emerging Markets) |
| SCHF (Schwab International Equity) | VEA (Vanguard FTSE Developed Markets) |
|
Real Estate ETF’s |
Real Estate ETF’s |
| SCHH (Schwab U.S. Reit) | USRT (iShares Core U.S. REIT) |
|
Bond ETF’s |
Bond ETF’s |
| BNDX (Vanguard Total International Bond) | IAGG (iShares Core International Aggregate Bond) |
| SCHR (Schwab Intermediate-Term U.S. Treasury) | IEI (iShares 3-7 Year Treasury Bond) |
| SCHP (Schwab U.S. TIPS) | SPIP (SPDR Portfolio TIPS) |
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.