So last year I began DCA'ing every month into a taxable brokerage. I've been having too much cash sitting around and now I'm socking away a bit every month into taxable.
There hasn't been any capital losses but I feel like eventually there will be. I'd love to be able to start taking advantage of claiming losses and saving on tax payments. As I understand it you can claim up to $3k of losses per year off of your income; and if you lose even more you can even use the excess losses to raise the basis of your oldest stocks for some nice tax savings much further down the line (ie sell old lots with capital gains in the amount of your losses exceeding 3k).
But there's a catch. Wash sale rules. These rules state that you cannot buy or have bought a stock that is "substantially identical" in the 30 days prior to or after the sale, or the losses simply will not count for tax purposes. Well... that's unfortunate.
The first part of this equation was finding funds that are *not* "substantially identical". I think the advice here is that if you sell VTSAX, you can buy VFIAX (S&P). And vice versa. Cool. And similarly, if you sell VTIAX you can buy VFWAX.
So part 2: Dollar Cost Averaging. Right now I'm pumping in excess cash on the 1st of each month. Some months this is ok. Like January has 31 days, so February 1st is 31 days from January 1st. And December 1st is 31 days from January 1st too.
But then... there's February. 28 days. That's within the window. If I log in on March 1st and see that I've got losses, I've got to wait another 3 days. A number of problems here. I can't turn on auto-invest. I can't do DRIP either. And if I wait 3 days the loss might go away entirely.
I guess the only thing I can think of is making manual purchases every 31 days. The problem here is now I'm off my cadence. This year would be:
* Jan 1st
* Feb 1st
* March 4th
* April 4th
* May 5th (it's on Tuesday this year btw)
* June 5th
* July 6th
* August 6th
* September 6th
* October 7th
* November 7th
* December 8th
etc.
I still make 12 deposits this year but each one gets further and further out. By 2030 they wrap around and I only get 11 deposits that year.
This is starting to feel like "too much work". Maybe I'm building a system here that's likely to fall apart.
What is the common advice here? What is everyone else doing? Is this worth this much extra work?