I can't lose (Unfortunately)

[Statutory]

A few months ago I purchased the following index funds on Vangaurd:

Vangaurd 500
Vangaurd Pacific
Vangaurd European


I spread my money around hoping to take advantage of the 3k/year deduction from losses, all are up, which is clearly great, but I'd like to set myself up for any and all tax benefits.

SO my question is, I am going to buy more index funds. IF I buy into the same index funds, and they go down, can I sell specifically the shares I lost money on? OR is there cost averaging or some other method of not letting me take a loss. Then I should by in different funds I suppose?

And I would still love an answer to my question about whether investing in foreign index funds hedges or bets against the US dollar?

Thanks

[hawk59]

you can sell the specific shares you lost money on

[gull]

I think you can only take harvest tax-losses if you're using ETFs, because then you can control which shares get sold. With a fund, there are tons of shares, none of which are documented to be yours, and none of which can be sold at your whim.

[Statutory]

[ QUOTE ]
I think you can only take harvest tax-losses if you're using ETFs, because then you can control which shares get sold. With a fund, there are tons of shares, none of which are documented to be yours, and none of which can be sold at your whim.

[/ QUOTE ]

this seems to make sense. Anyone else?

[bav]

This is one reason I have three brokerage accounts. I can buy shares and mutual funds in different accounts so I can unload the ones I want without any question at all about which shares I'm selling.

[gull]

Are you positive? I'm pretty sure you could do it from a single account. Also, having multiple accounts won't let you do it with mutual funds.

[bav]

[ QUOTE ]
Are you positive? I'm pretty sure you could do it from a single account. Also, having multiple accounts won't let you do it with mutual funds.

[/ QUOTE ]
I'm unaware of how to tell my broker that I want to sell the last 100 shares of QQQQ I bought and not the first 100, other than to fill out some form or call and tell them. That used to be the case, anyway--you couldn't sell shares online or via the automated phone thingy and specify shares. Yes, in theory you can do it but the procedure was just a PITA.

Mutual funds are the same way. If you just say "sell $10,000 of XYZZY" they do some averaging by default. You have go to some effort to say "sell from the last block I bought" or "sell from the first block".

Buying through different brokerages solves that completely for me. When I buy a 2nd block of the same shares at a significantly different price, I just do it through a different broker. When I'm ready to sell, there's no question what I'm selling.

And I don't understand the comment about not being able to do mutual funds this way. I buy mutual funds through brokers, not directly from the fund. They'll still do the averaging of the reinvested fund shares, though. And yeah, if you're doing a monthly investment into a fund rather than just buying a glump in one purchase, multiple brokers doesn't help; but I buy in glumps.

[Statutory]

[ QUOTE ]
This is one reason I have three brokerage accounts. I can buy shares and mutual funds in different accounts so I can unload the ones I want without any question at all about which shares I'm selling.

[/ QUOTE ]

This seems like a really easy solution to what may or may not be a problem.

Ill look into this some more.

Thanks

[Statutory]

Update:

I called Vanguard and was able to buy into the same index fund I have while making the second purchase a second account. This way If it goes down I can sell at a loss, while keeping the original fund that is still in the green.

By using this method one would incure double maintnance fees if value is under 10K.

Thought someone else may be in the same boat, so there you go.

[deathtoau]

[ QUOTE ]
Quote:
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I think you can only take harvest tax-losses if you're using ETFs, because then you can control which shares get sold. With a fund, there are tons of shares, none of which are documented to be yours, and none of which can be sold at your whim.


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this seems to make sense. Anyone else?

[/ QUOTE ]

You can direct your broker or transfer agent to sell any specific lots of share you want, whether mutual fund, stock, etc. When you send your instructions merely request to sell 100 shares of mutual fund XYZ purchased between June 2006 and July 2006 that have the specific cost basis you want to use. Of course this only applies if you file taxes on investments using the Specific Lots Method, if you have used the Average Cost Method in the past the IRS does not allow you to change your accounting method. If you do plan on using specific lot redemptions, keep detailed records and beware of wash sale restrictions.