UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: rustedSoul Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75523  
Subject: Re: Regular investing Date: 1/12/1999 2:55 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
There is a way to regularly invest monthly contributions without large brokerage fees. I don't recommend that you do this unless you are comfortable with the associated risks. There is also a nice tax benefit which you might be able to take advantage.

First, buy the stocks (in Jan, e.g.) on margin. Every month, pay part of the margin off. At the end of the year, the margin is gone (since you divided up the stock purchase over 12 months). This reduces you transactions costs to just one/stock/year.

As an added benefit, margin interest is tax deductible in a couple of cases. From what I read it can get complicated. The simplest case is washing margin interest with investment income, if your margin interest is less than the dividend income. So, if you paid $400 in margin interest and had $500 of dividend income, you get to wash $400 of dividend income with the margin on your taxes.

Using this method is absolutely the way to go if you are investing in quality growth companies. You will miss out on a lot of growth if you have to wait the whole year to be fully invested.

If you want to invest in an S&P500 index, you can buy SPY on margin just like other stocks. However, the above method is probably better suited to a more aggressive investment strategy.

rustedSoul
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Berkshire Hathaway

Brookfield Asset Management
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement