Prove Your Worth, Diversify My Portfolio

  • Guest, it's time once again for the hotly contested and exciting FoH Asshat Tournament!



    Go here and fill out your bracket!
    Who's been the biggest Asshat in the last year? Once again, only you can decide!
1,658
0
When I was getting started I did a lot of reading athttp://www.bogleheads.org/wiki/Lazy_PortfoliosThey're really big on the super low cost Vanguard index funds someone mentioned above, although several alternatives like Schwab, etc. exist.

The goal is avoiding attempts to time the stock market...the basic philosophy states that the market has never failed over any meaningful measure of time and that it's pointless for a mainstream retirement investor or whatever to try and be smarter. Maybe not for a hardcore day trader or someone employed in investing, but I've been a fan at any rate.
 

Soriak_sl

shitlord
783
0
Does anyone actually save records of all their transactions, or do you trust your brokerage to do it right? Scottrade lets me set my tax strategy (e.g. minimize taxes, sell shares bought first...) - I just figured they'd handle this stuff for me. Wrong assumption?
 

Eomer

Trakanon Raider
5,472
272
I print out quarterly statements that have my trading activity, and everything's entered in to Quicken as well. I figure that's good enough record keeping. My transactions are fairly minimal really. I receive dividends quarterly from the 6-8 ETF's I own (actually I guess monthly from a couple bond funds) and generally I dump my contribution limits in to my registered tax free accounts in January and top up/rebalance things then.
 

Elerion

N00b
735
46
Wait, your brokerages don't send you a receipt for each trade? I do all my trading in-house to avoid commissions, but I get a detailed receipt of each trade by e-mail and can have back office print a periodical summary no problem. I assume our regular customers get the same service, but I guess it can be harder if you use multiple brokerages.

Also, does "sell shares bought first" make a difference in the US tax system? Over here you average out your entry price whenever you buy new shares, and taxes on realization are calculated based on that average.

What other tax optimization can your brokerage do for you on trades? The only thing I can think of (in the Norwegian system) would be realizing losses (and then rebuying) at end of year if the time value of accounting that loss asap exceeds the commission.
 

Soriak_sl

shitlord
783
0
Wait, your brokerages don't send you a receipt for each trade? I do all my trading in-house to avoid commissions, but I get a detailed receipt of each trade by e-mail and can have back office print a periodical summary no problem. I assume our regular customers get the same service, but I guess it can be harder if you use multiple brokerages.
Yeah, they send out a receipt that I promptly delete. It's also in the online system, I just never bothered to really look at it.

Also, does "sell shares bought first" make a difference in the US tax system? Over here you average out your entry price whenever you buy new shares, and taxes on realization are calculated based on that average.
Yes, each share you buy comes with its own tax base. So if you have 100 shares at $5 and 100 shares at $10, then sell when the stock price is $7.50 you could either realize a profit or a loss. Which happens depends on which shares you sell. So the brokerage gives you an option to either sell the cheapest shares, the ones that minimize your taxes, the ones that let you "harvest" a loss (so you can balance it with some other gains), or just sell whichever stocks you bought first/last.

I think that's the only tax optimization they do. But I rarely sell stocks - I mostly just buy.
 

Blazin

Creative Title
<Nazi Janitors>
6,379
33,478
Somewhat on the topic of receipts for trades and inputting tax basis on returns. My brokerage house sent me my trades broken out for each lot filled but when they sent the info the IRS they combined trades that were in the same stock on the same day. So it flew up a red flag to IRS dummy computers that I was missing tons of transactions because each one didn't match up and the computer apparently didn't give a shit that the total of all trades were the same. So I sent them in every freaking bit of trading data I had hoping to avoid a full audit next I heard from them was "oops we made a mistake and have calculated we owe you money you'll receive a check in the mail". I was never able to get a clear answer on how the IRS wants trades grouped on tax returns