I've been giving this a lot of thought and I'm looking for some opinions.
I've been reading about tax loss harvesting
Short version is that you can use losses to offset your tax liability on gains.
Important: You can't immediately buy back a stock you sell at a loss for 30 days, but this doesn't apply to ETFs. You could, for instance, harvest the loss on a S&P 500 ETF like IVV and immediately buy a different S&P 500 ETF like VOO to keep the same exposure.
I've been thinking about how I might do this with my Ark funds that have taken a beating during this tech crash.
Let me give you a real example:
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I sold some stock recently that had $30,000 short-term gains. I'm going to owe 24% tax on that ($7200).
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I'm currently down $30,000 on my ARK ETFs. If I were to sell those right now, the $30,000 loss would offset the $30,000 gain... and I would save $7200 in taxes.
So the risk there, I guess, is that the ARK funds will shoot back up and I'll miss the gains (though more realistically it'll just keep dropping cuz tech is crashing). Remember, I can't buy back the ARK funds for 30 days or it would trigger a wash sale.
My initial thinking was... well, maybe I can just buy a similar tech-heavy ETF immediately after selling ARK. That way, if Tech rebounds, I can ride it back up. Or, alternatively, if tech continues to drop I'd just sell that ETF 30 days from now, harvest those losses as well, and buy back ARK.
Problem is, I wasn't really seeing any ETFs that mirror ARK.
My Plan B is this... what if I just look at ARK's actual holdings (for instance, with ARKK you can see the 58 stocks and their weighting here) and just buy the individual stocks with the same weighting? In theory, this seems like it would be relatively easy for me to do with a spreadsheet. If I am holding $10,000 worth of ARKK and know that Roku makes up 5.2%, I just buy $520 worth of Roku.... and do a similar thing with the other 57 stocks.
30 days from now, I'd be able to sell all the individual stocks and buy back my $10,000 of ARKK.
That way, I'm literally holding the exact same exposure so that if ARKK rebounded in the next 30 days, I'd ride it up while still saving $7200 in taxes due to the loss harvesting.
I suppose the next issue would be that ARKK is actively managed and could see stocks sold/bought over the next 30 days, but I could probably manually handle mirroring that, right? And really, the main thing I'm trying to account for is the entire tech sector rebounding within the next month, which is pretty unlikely as-is.
Thoughts? Tell me why this is a bad idea. Tell me why you ARK bagholders aren't doing the same thing.
Thanks.
Submitted May 11, 2021 at 06:31AM by Investnew https://ift.tt/3f8Llz7
