Can You Beat The Market? Should You Even Try? [View article]
"Instead, I have other goals: I want to be financially secure from economic disaster, I want to consistently beat inflation, I want a boring portfolio that doesn't fluctuate too much on a yearly basis, I want a steady income stream, and I want the portfolio to grow slowly but steadily every few years so I don't have to wait a decade or so before I can "know" that I can touch the money."
Nice goals! I count five in that list and agree with all as being reasonable. 1) "I want to be financially secure from economic disaster" This is tricky. Some say gold/silver, others, bonds. Personally, I like a backup of productive land to provide vegetables and/or chicken eggs. I'll sell my excess for your gold/silver when you're hungry. Your gold/silver I collect might be enough to get some fuel/milk/beef. That is how I judge being secure during 'economic disaster'. 2) "I want to consistently beat inflation" I'm unsure here if you're talking about income from investments or paper gains. Personally, I like money payments as the income to beat inflation. I can use that income at the time of payment to get fuel/milk/beef. 3) "I want a steady income stream" Personally, this is my #1 goal. 4) "I want a boring portfolio that doesn't fluctuate too much on a yearly basis" Again, are you talking about the income stream fluctuation or the value fluctuation? Personally, I desire your #3. Value fluctuation doesn't matter (even if it's extreme).
Our Long-Term, Investing For Increased Yield Strategy [View article]
I have an issue in that this sounds much like a "leverage" strategy that doesn't lower risk, but increases it. The higher risk, which might be slight, could provide a higher reward.
Here's a hypothetical. Company A and company B make competing widgets. Company A suffers a "black swan" event, which would be a "white swan" event for Company B. The hypothetical being that a steady market demand means that B gets revenue A cannot.
If I simply own both, it could be a wash.
Using this strategy, I would have 2x of Company A (via the put) and none of Company B (via the call away).
The Good News About Failure With Blue Chip Investing [View article]
I read your link and I'm sorry, but "news" (e.g. cnn) Is not what I trust, I want factual data. One source is: http://bit.ly/Plq3iG
Whomever is commander in chief has very little control over taxation or spending. Our representatives in the house and senate own that, with only the CiC having a veto power.
View http://bit.ly/Plq3yY ... phone/mail/text whatever your congressional " representatives" to do _something_ ...
The Good News About Failure With Blue Chip Investing [View article]
Paul,
Thanks for the comment-reply.
To answer my own question, I'll start with a few of my personal predictions of future taxation (aka. the next 1-5 years). 1) I expect to be taxed at ~25% of my taxable retirement income. The days of living off dividends and only getting taxed at 15% are likely to end. 2) I don't expect Roth distributions to ever be taxed at withdrawal. It may be phased out where contributions (and probably conversion) are eliminated. 3) I expect marginal tax income levels to remain unchanged, and the rates above ~200k to increase. The impact being that as income increases via inflation, an AGI of $100k may be the norm (aka. 25% marginal). 4) I suspect long term cap-gain to be taxed as ordinary income. This might even involve a lowering/elimination of the primary residence exemption. 5) It's possible corporate tax rates may drop. This is a coin toss. (as Dennis Miller would say, "then again, I could be wrong")
Given that, here's a hypothetical. $100k in an IRA (traditional/rollover). In 10 years, say it doubles to $200k. I'm also assuming getting taxed 25% no matter what. Option a) It is withdrawn over time, RMD or a priori. At a minimum, $50k in taxes will get paid. Option b) As possible convert it to a Roth while the taxes paid for conversion are 25% (out of pocket). At a minimum, $25k taxes are paid today (if one could lump convert today). Distributions are taxed at 0%.
This hypothetical of course doesn't factor the reality that the distribution or conversion are likely to occur over time while the value increases. The point though is that starting today, and while possible, conversion is likely a better strategy to lock in the taxes now rather than on an increased basis later.
Regarding a taxable account (currently 55% of my total portfolio, and growing BTW). An increase of the dividend income being taxed higher than 15% isn't that much a bother. Yes, I will have a hit since my marginal is significantly higher than that, but it isn't a factor I can control much. Yes, high yielders may lose some luster, but at some point I will still want the dividends as the income stream (versus selling assets).
I feel as if I'm rambling completely off-topic. I do appreciate the (generally) intelligent and pleasant exchange here at SA. It is a shame though that the tax issues of investing aren't addressed much.
My Mad Method: 2012 First Half Recap [View article]
Ahhh, I can understand the foreign positions being a bother.
FYI, the contribution limits apply to any and all IRA types. So, each individual is limited to $5000 ($6000 over 50) regardless of the type or number of IRA's.
And one more tidbit, the deduction that is allowed when using pre-tax dollars starts phasing out for a married filing jointly at $90k (if covered by a retirement plan at work).
Good luck with your investments (been a nice week so far!)
Regarding COP, I think the contenders sheet should have the TTM EPS adjusted post-spinoff. Analysts seem to have next quarters estimates at roughly 2/3 previous earnings. Of course this will impact many other metrics that are computed from the earnings.
Also, given that PSX has indicated initiating their dividend at .20 or using a 2/3 split would have a .46 or .44 previous quarterly dividend versus the adjusted value of .5088 in the sheet. Is the 77.1% adjustment you made based on pricing at the day of spinoff?
The Good News About Failure With Blue Chip Investing [View article]
Paul,
The tricky issue about what to do with an IRA and facing the future (present?) RMD is _always_ an individual tax situation. It also involves a prediction of future taxation.
You mention being in a "high" marginal rate today. If you're currently retired then you are doing very well sir!
If you're not retired, then consider the implications when you are. Will you still be in that "high" marginal rate? What do you for see as your future marginal rate? What strategy would you employ to minimize your future taxation (given your personal predictions of future taxation)?
Like you, I also prefer to pay the least amount of taxes possible. As we both know, "the man" is going to get his slice sometime, and that involves a little bit of "prediction" of what "the man" is going to do, and what we'll want/need from the holdings.
If you have a transaction history, I could also provide a "sheet".
I've been planning on my first article to illustrate a method I use with google docs. It involves tracking various metrics, "total cost", etc. Sine you're willing to "drop drawers" on this portfolio of yours, it might prove to be a good data set (that goes farther back than anything I have "tracked").
The input data needed is simply: Date, Ticker, Shares, Price, Cost note: "Cost" might be commission, or a computed "tax" that the sheet computes from a variable someone can adjust for their own purposes.
First line could be: June 1, 2008, USD, 46783, $1, $0
Obamacare Part II: The Great Hospital Squeeze [View article]
"At some point soon health care is going to turn into a huge budget problem for the government and then they will only want to cut costs." That point was about 6 years ago ... and that can is continuing to be kicked down the road. The affordable care act is probably going to prove to be a short-term platitude that will flatten the growth curve of cost, but have very little effect on flattening the ever increasing costs.
"Obamacare was designed to destroy private healthcare corporations. " Oh, please.
Bob Diamond's banking career may be over, but that doesn't mean he'll be slinking quietly into his retirement years. He's likely to be a highly sought-after candidate at P-E firms and hedge funds. He might be toxic to a publicly-traded firm but he's got the money and the experience to thrive at a less-regulated private company. [View news story]
Justice would involve his "retirement years" behind bars.
Can You Beat The Market? Should You Even Try? [View article]
Nice goals! I count five in that list and agree with all as being reasonable.
1) "I want to be financially secure from economic disaster"
This is tricky. Some say gold/silver, others, bonds. Personally, I like a backup of productive land to provide vegetables and/or chicken eggs. I'll sell my excess for your gold/silver when you're hungry. Your gold/silver I collect might be enough to get some fuel/milk/beef. That is how I judge being secure during 'economic disaster'.
2) "I want to consistently beat inflation"
I'm unsure here if you're talking about income from investments or paper gains. Personally, I like money payments as the income to beat inflation. I can use that income at the time of payment to get fuel/milk/beef.
3) "I want a steady income stream"
Personally, this is my #1 goal.
4) "I want a boring portfolio that doesn't fluctuate too much on a yearly basis"
Again, are you talking about the income stream fluctuation or the value fluctuation? Personally, I desire your #3. Value fluctuation doesn't matter (even if it's extreme).
A Dividend Growth Investor Looks At Earning Season [View article]
I put together a sheet showing the "investbynumbers" 60/40 versus what DVK has presented using the same $46,783 at start of July, 2008.
IBN meets his goal of "total return". It's greater by $1510.
DVK meets his goals of "increasing income + preservation of capital".
IBN has reinvested dividends (at end-of-year), DVK I dunno when reinvesment was/is done other than reported results.
enjoy ... http://bit.ly/MVEoAb
Our Long-Term, Investing For Increased Yield Strategy [View article]
Here's a hypothetical. Company A and company B make competing widgets. Company A suffers a "black swan" event, which would be a "white swan" event for Company B. The hypothetical being that a steady market demand means that B gets revenue A cannot.
If I simply own both, it could be a wash.
Using this strategy, I would have 2x of Company A (via the put) and none of Company B (via the call away).
What am I not understanding here?
Dividend Growth Portfolio: 2012 Mid-Year Update [View article]
Does your 12-step system involve 6 steps from the golf cart to the ball, and 6 steps back?
;)
Dividend Contenders Smackdown XXVIII [View article]
The Good News About Failure With Blue Chip Investing [View article]
Whomever is commander in chief has very little control over taxation or spending. Our representatives in the house and senate own that, with only the CiC having a veto power.
View http://bit.ly/Plq3yY ... phone/mail/text whatever your congressional " representatives" to do _something_ ...
My Mad Method: 2012 First Half Recap [View article]
Longer answer: Will you trade in/out _every_ single day (that includes Sunday afternoon as a start of "day").
The Good News About Failure With Blue Chip Investing [View article]
Thanks for the comment-reply.
To answer my own question, I'll start with a few of my personal predictions of future taxation (aka. the next 1-5 years).
1) I expect to be taxed at ~25% of my taxable retirement income. The days of living off dividends and only getting taxed at 15% are likely to end.
2) I don't expect Roth distributions to ever be taxed at withdrawal. It may be phased out where contributions (and probably conversion) are eliminated.
3) I expect marginal tax income levels to remain unchanged, and the rates above ~200k to increase. The impact being that as income increases via inflation, an AGI of $100k may be the norm (aka. 25% marginal).
4) I suspect long term cap-gain to be taxed as ordinary income. This might even involve a lowering/elimination of the primary residence exemption.
5) It's possible corporate tax rates may drop. This is a coin toss.
(as Dennis Miller would say, "then again, I could be wrong")
Given that, here's a hypothetical.
$100k in an IRA (traditional/rollover). In 10 years, say it doubles to $200k. I'm also assuming getting taxed 25% no matter what.
Option a) It is withdrawn over time, RMD or a priori. At a minimum, $50k in taxes will get paid.
Option b) As possible convert it to a Roth while the taxes paid for conversion are 25% (out of pocket). At a minimum, $25k taxes are paid today (if one could lump convert today). Distributions are taxed at 0%.
This hypothetical of course doesn't factor the reality that the distribution or conversion are likely to occur over time while the value increases. The point though is that starting today, and while possible, conversion is likely a better strategy to lock in the taxes now rather than on an increased basis later.
Regarding a taxable account (currently 55% of my total portfolio, and growing BTW). An increase of the dividend income being taxed higher than 15% isn't that much a bother. Yes, I will have a hit since my marginal is significantly higher than that, but it isn't a factor I can control much. Yes, high yielders may lose some luster, but at some point I will still want the dividends as the income stream (versus selling assets).
I feel as if I'm rambling completely off-topic.
I do appreciate the (generally) intelligent and pleasant exchange here at SA.
It is a shame though that the tax issues of investing aren't addressed much.
My Mad Method: 2012 First Half Recap [View article]
FYI, the contribution limits apply to any and all IRA types. So, each individual is limited to $5000 ($6000 over 50) regardless of the type or number of IRA's.
And one more tidbit, the deduction that is allowed when using pre-tax dollars starts phasing out for a married filing jointly at $90k (if covered by a retirement plan at work).
Good luck with your investments (been a nice week so far!)
Dividend Contenders Smackdown XXVIII [View article]
Regarding COP, I think the contenders sheet should have the TTM EPS adjusted post-spinoff. Analysts seem to have next quarters estimates at roughly 2/3 previous earnings. Of course this will impact many other metrics that are computed from the earnings.
Also, given that PSX has indicated initiating their dividend at .20 or using a 2/3 split would have a .46 or .44 previous quarterly dividend versus the adjusted value of .5088 in the sheet. Is the 77.1% adjustment you made based on pricing at the day of spinoff?
Thanks again for the CCC list and your articles.
The Good News About Failure With Blue Chip Investing [View article]
The tricky issue about what to do with an IRA and facing the future (present?) RMD is _always_ an individual tax situation. It also involves a prediction of future taxation.
You mention being in a "high" marginal rate today. If you're currently retired then you are doing very well sir!
If you're not retired, then consider the implications when you are. Will you still be in that "high" marginal rate? What do you for see as your future marginal rate? What strategy would you employ to minimize your future taxation (given your personal predictions of future taxation)?
Like you, I also prefer to pay the least amount of taxes possible. As we both know, "the man" is going to get his slice sometime, and that involves a little bit of "prediction" of what "the man" is going to do, and what we'll want/need from the holdings.
Retired Investors - Treat Your Income Generating Portfolio Like A Business [View article]
His muni being tax-free doesn't imply a Roth.
Dividend Growth Portfolio: 2012 Mid-Year Update [View article]
If you have a transaction history, I could also provide a "sheet".
I've been planning on my first article to illustrate a method I use with google docs. It involves tracking various metrics, "total cost", etc.
Sine you're willing to "drop drawers" on this portfolio of yours, it might prove to be a good data set (that goes farther back than anything I have "tracked").
The input data needed is simply:
Date, Ticker, Shares, Price, Cost
note: "Cost" might be commission, or a computed "tax" that the sheet computes from a variable someone can adjust for their own purposes.
First line could be:
June 1, 2008, USD, 46783, $1, $0
Obamacare Part II: The Great Hospital Squeeze [View article]
That point was about 6 years ago ... and that can is continuing to be kicked down the road. The affordable care act is probably going to prove to be a short-term platitude that will flatten the growth curve of cost, but have very little effect on flattening the ever increasing costs.
"Obamacare was designed to destroy private healthcare corporations. "
Oh, please.
Bob Diamond's banking career may be over, but that doesn't mean he'll be slinking quietly into his retirement years. He's likely to be a highly sought-after candidate at P-E firms and hedge funds. He might be toxic to a publicly-traded firm but he's got the money and the experience to thrive at a less-regulated private company. [View news story]