Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Next Thread
Author: MightyMouse Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121114  
Subject: Taxes and strategies Date: 11/17/1998 4:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
ok
I'm new to this investment game and the advice from the Motley fools seems solid in theory. My question(s)are: who has the 10 grand to shell out to buy 4 of the top 10 performers on the DJIA? I sure don't! and by investing in mutual funds and a Roth IRA and my 401(k)I can give a little each month...the big boys of the Dow can cost $100 a share...

2nd question...mutual funds are tax shelters and I'm combining before and after tax (401 and Roth IRA) investments. If you buy lots of stock on the DJIA and then 1 yea later (per the brothers' advice) sell shares in 1 company to grab a higher performing one..you get taxed to DEATH! it doesn't seem like the Lead Fools take that into consideration when talkign about yield....

any input is welcome, though!
Print the post Back To Top
Author: jessholl One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6346 of 121114
Subject: Re: Taxes and strategies Date: 11/17/1998 6:33 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
You may want to check out the DRIP portfolio for investing smaller amounts of money.

Mutual funds in general are absolutely not tax shelters, exceptions being mutual funds going into goverment bonds, in 401K plans etc. In fact I have done some peoples tax returns who were taxed on more capital gains than they made for the year from the mutual funds. Thats because mutual fund companies figure out thier capital gains for the year and divide it by whoever is in the fund on the day of distribution. If you were in a fund that did great at the beginning of the year, started to lag and many people started to leave, you get stuck with a higher percentage of the tax burden.

I am fairly certain there has been much analysis on the after tax returns on the various portfolios. Try the message board or archives. A know before capital gains changed back to 12 months the analysis of whether to hold stocks 12 months or 18 was a big issue.

I also believe that in the fool steps they talk about investing first in tax deferred plans such as the 401K and then look into investing the rest.

Hope this helps.

Wendy

Print the post Back To Top
Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6357 of 121114
Subject: Re: Taxes and strategies Date: 11/18/1998 10:20 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
[[I'm new to this investment game and the advice from the Motley fools seems solid in theory. My
question(s)are: who has the 10 grand to shell out to buy 4 of the top 10 performers on the DJIA? I
sure don't! and by investing in mutual funds and a Roth IRA and my 401(k)I can give a little each
month...the big boys of the Dow can cost $100 a share...]]

Perhaps you can't get there all at once. But sooner or later you'll get there. You might want to spend some additional time in the F4 area in order to interact with others who have saved enough to participate in the F4 program. And...it doesn't take $10k to get your feet wet.

[[ 2nd question...mutual funds are tax shelters and I'm combining before and after tax (401 and Roth
IRA) investments.]]

Mutual funds are tax shelters? I certainly don't agree with this statement. If you purchase mutual funds via your pre-tax 401k plan, it is the 401k plan that shelters your taxes...not the mutual funds that you purchase. You are just limited in your investments to the mutual funds provided by the 401k plan administrator.

Mutual funds are no more a tax shelter than any other investment. In fact, because of the annual distributions required to be made by mutual funds, many mutual funds are actually tax hazzards.

[[ If you buy lots of stock on the DJIA and then 1 yea later (per the brothers'
advice) sell shares in 1 company to grab a higher performing one..you get taxed to DEATH!]]

Taxed to death? With a maximum tax of only 20%? I wouldn't call that "taxed to death". Plus the fact that your mutual fund distributions, much (if not all) is a short term gain, will be taxed at ordinary income rates (could be as high as 39.6%). So I would much rather trade a 20% tax rate (on gains historically GREATER than the vast majority of mutual funds) than 39.6% rate on crappy returns. But hey...that's just me.

[[ it
doesn't seem like the Lead Fools take that into consideration when talkign about yield....]]

But check out your mutual fund. Do THEY take tax issues into account whey THEY speak about yield? Nope. And neither does any other investment. The yield that they advertise is a pre-tax yield. That's really all anybody can advertise, since each persons tax issues are completely different.

But this entire issues has been discussed and re-discussed in the F-4 area. You might want to go over there and check it out and ask some other Fools in that area for some additional guidance.

TMF Taxes
Roy

Want to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. There is still time available to do that tax planning (and tax saving) before the end of the year. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Pay special attention to the "archives" section. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Next Thread
Advertisement