Stock Advice Thread

[BlueThruAndThru]

Anybody have good info on how REITs work? Anybody own any?

What Is a Real Estate Investment Trust (REIT)?
A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.


In general, REITs specialize in a specific real estate sector. However, diversified and specialty REITs may hold different types of properties in their portfolios, such as a REIT that consists of both office and retail properties.

Specifically, a company must meet the following requirements to qualify as a REIT:

• Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
• Derive at least 75% of gross income from rents, interest on mortgages that finance real property, or real estate sales
• Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
• Be an entity that's taxable as a corporation
• Be managed by a board of directors or trustees
• Have at least 100 shareholders after its first year of existence
• Have no more than 50% of its shares held by five or fewer individuals

-I own WELL which focuses on seniors housing and the like. I'm starting to divest from it because it's in a taxable account. Got to pay taxes on the dividends. It was bought when I first started investing so a bit of a mistake by me. Learn and move on.

-I think REITs are a great income generator and will hold their value and increase.

-I'm still 10+ years from retirement so I'm not looking for income, yet. But as I get closer I will put some money into the REIT space for sure.

 

[lz]

Yeah, I think that's what I'd like to do, not sell stock and take the money, but sell stock and move to something else. I've just never actually "sold" before, so I wasn't sure if it just lands back in my Vanguard Money Market account, and if it's still taxed either LT or ST. Not exactly sure what to expect.

In an IRA you have no tax problems until you take money out, then it’s 100% taxable. If it’s a taxable account you have, you are going to pay capital gains tax on it if you make a profit. No ifs, ands or buts, I used to prepare taxes as a CPA.

 

[BlueRaider22]

In an IRA you have no tax problems until you take money out, then it’s 100% taxable. If it’s a taxable account you have, you are going to pay capital gains tax on it if you make a profit. No ifs, ands or buts, I used to prepare taxes as a CPA.

I think he was asking when are the taxes paid.........like are they paid as soon as you sell? Are they do on the quarter? Or do you attach them to your normal yearly taxes?

.....though I could be wrong.

 

[LineSkiCat14]

In an IRA you have no tax problems until you take money out, then it’s 100% taxable. If it’s a taxable account you have, you are going to pay capital gains tax on it if you make a profit. No ifs, ands or buts, I used to prepare taxes as a CPA.

Ahh ok. I have my 401k and my Roth IRA, which are basically in target retirement accounts. I don't touch 'em, and don't plan on touching them until I retire or if I find another peice of rental property (although, even taking out for that isn't likely).

This is just an individual brokerage account on the side. All I have is AMD and EXXON, but I am thinking of picking up Apple and a few other tech stocks, and wanted to know more about selling. The reason being, after my Savings Account Debacle a few pages ago (lol..), I realize it's better for me to put some of that "savings" into stock, even if I sell after 2-3 years, because the ROI is still more than a 0.8% savings account.

So basically, if I sell off AMD, which has a profit, I have to pay tax on said profit, no matter what, correct?

 

[lz]

Ahh ok. I have my 401k and my Roth IRA, which are basically in target retirement accounts. I don't touch 'em, and don't plan on touching them until I retire or if I find another peice of rental property (although, even taking out for that isn't likely).

This is just an individual brokerage account on the side. All I have is AMD and EXXON, but I am thinking of picking up Apple and a few other tech stocks, and wanted to know more about selling. The reason being, after my Savings Account Debacle a few pages ago (lol..), I realize it's better for me to put some of that "savings" into stock, even if I sell after 2-3 years, because the ROI is still more than a 0.8% savings account.

So basically, if I sell off AMD, which has a profit, I have to pay tax on said profit, no matter what, correct?

Yes, when you file your taxes (may affect your estimated tax payments if a large gain) unless you have capital losses to offset the gains. What I did was trade stocks in my Roth IRAs while still working, then did the same after retirement by rolling all my 401K into a regular IRA, took my own control, had no taxability worries until forced to take money out of my IRA at 70 and 1/2...believe that’s been pushed back a little.

 

[BlueRaider22]

Ahh ok. I have my 401k and my Roth IRA, which are basically in target retirement accounts. I don't touch 'em, and don't plan on touching them until I retire or if I find another peice of rental property (although, even taking out for that isn't likely).

You can make trades inside your IRA......shoot, you can trade 100x per day if you want........just don't take the money/investments out of the IRA vessel. This is extremely powerful. So, if you wanted to put every bit of your IRA retirement sum into Tesla that's gone up like crazy recently you can do that. You just have more risk.

 

[LineSkiCat14]

I think he was asking when are the taxes paid.........like are they paid as soon as you sell? Are they do on the quarter? Or do you attach them to your normal yearly taxes?

.....though I could be wrong.

Yep, that too. I was curious about that as well. From propety, I'm used to paying up at the end of the year with a Section C.

 

[lz]

Yep, that too. I was curious about that as well. From propety, I'm used to paying up at the end of the year with a Section C.

Nope, only if large enough to affect increasing estimated payments. Report stock sales on Sch D of your 1040 on April 15th.

 

[Chuckinden]

You can make trades inside your IRA......shoot, you can trade 100x per day if you want........just don't take the money/investments out of the IRA vessel. This is extremely powerful. So, if you wanted to put every bit of your IRA retirement sum into Tesla that's gone up like crazy recently you can do that. You just have more risk.

BlueRaider22, who do you use for buying and selling stock?

 

[LineSkiCat14]

Yes, when you file your taxes (may affect your estimated tax payments if a large gain) unless you have capital losses to offset the gains. What I did was trade stocks in my Roth IRAs while still working, then did the same after retirement by rolling all my 401K into a regular IRA, took my own control, had no taxability worries until forced to take money out of my IRA at 70 and 1/2...believe that’s been pushed back a little.

Ok, so I do have some sort of gains tax if I sell, and if I'm reading correctly, you did all your trading WITHIN the retirement accounts?? I probably should look into that, but for now, I'm trying to save about $40-50k over the next 2-3 years, as a down payment on a home. Unfortunately, with the rental property I own now, a DP on a 2nd house is much larger, 10% and beyond.

So my thought was, with the savings account growth almost zilch, doing some short-term buy and hold in the stock market might be my best bet to earn a little extra cash. The question now, is, does the gains tax make this a viable option? I guess investments need to turn a pretty penny.

 

[lz]

Line, I also had accumulated some money I needed to invest, bit the bullet and paid my share of capital gains taxes over a 10 year period, grew to $100,000. Good news on capital gains taxes, you aren’t paying tax on 100% of what you make unlike wages, so that’s a nice deal, particularly a lower bracket by waiting to sell much of it slowly until my SS kicked in, so I had a pension and money from Roth IRAs only in years needed, and enough stock sales from the taxable account to tide me over since I chose not to work age 60 to 65.

 

[BlueThruAndThru]

Line, I also had accumulated some money I needed to invest, bit the bullet and paid my share of capital gains taxes over a 10 year period, grew to $100,000. Good news on capital gains taxes, you aren’t paying tax on 100% of what you make unlike wages, so that’s a nice deal, particularly a lower bracket by waiting to sell much of it slowly until my SS kicked in, so I had a pension and money from Roth IRAs only in years needed, and enough stock sales from the taxable account to tide me over since I chose not to work age 60 to 65.

This is exactly what I'm trying to do. No pension but will roll the 401k.

Well done.

 

[BlueRaider22]

BlueRaider22, who do you use for buying and selling stock?

fidelity

 

[BlueRaider22]

This just flashed across my Facebook page from Motley Fool.





The S&P 500 is up 409-fold over the last 100 years.

Or 23,216-fold if you include dividends.

Never forget dividends.

 

[AustinTXCat]

This just flashed across my Facebook page from Motley Fool.





The S&P 500 is up 409-fold over the last 100 years.

Or 23,216-fold if you include dividends.

Never forget dividends.

+1

Dividends are a game-changer, even more so if compounded.

 

[Get Bucket$]

Ok, so I do have some sort of gains tax if I sell, and if I'm reading correctly, you did all your trading WITHIN the retirement accounts?? I probably should look into that, but for now, I'm trying to save about $40-50k over the next 2-3 years, as a down payment on a home. Unfortunately, with the rental property I own now, a DP on a 2nd house is much larger, 10% and beyond.

So my thought was, with the savings account growth almost zilch, doing some short-term buy and hold in the stock market might be my best bet to earn a little extra cash. The question now, is, does the gains tax make this a viable option? I guess investments need to turn a pretty penny.

I’d be less concerned about the capital gains tax and more concerned about your assumption that you are going to have appreciation in the account in a short term scenario.

 

[ekywildcat]

In an IRA you have no tax problems until you take money out, then it’s 100% taxable. If it’s a taxable account you have, you are going to pay capital gains tax on it if you make a profit. No ifs, ands or buts, I used to prepare taxes as a CPA.

Great thread, love following it. Not a trader, yet, I monitor mine and my wife's IRA's. No stocks, just mutual funds, and her 403b at work.

Anyway, who keeps track of all these purchases and sells for tax purposes? The individual or does the brokerage send you a nice form at the end of the year detailing gains and losses to do your taxes?

 

[LineSkiCat14]

I’d be less concerned about the capital gains tax and more concerned about your assumption that you are going to have appreciation in the account in a short term scenario.

Yeah, I get that.. Is it fair to say that investing in a few broad tech index funds will, more than likely, return a gain that's more than a savings account? I'm not trying to pick something super risky. I'm talking AMD, Apple, MS, Cisco, maybe some larger dividend stocks.

I will say, it does make me want to keep half of that money in cash, in case of a catastrophic crash that would nuke earnings. So I get what you're saying.

 

[Get Bucket$]

Is it fair to say that investing in a few broad tech index funds will, more than likely, return a gain that's more than a savings account?

Depends on how long of period of time in my opinion.

 

[LineSkiCat14]

Depends on how long of period of time in my opinion.

2-3 years.. Gets me past the short term gains tax. Not sure what else to do with an extra $750ish a month. Even investing into something that simply tracks the SP500 would be better than letting it sit in savings.. that is, aside from a giant crash.

.. maybe I'll wait to see what happens in November.

 

[lz]

Great thread, love following it. Not a trader, yet, I monitor mine and my wife's IRA's. No stocks, just mutual funds, and her 403b at work.

Anyway, who keeps track of all these purchases and sells for tax purposes? The individual or does the brokerage send you a nice form at the end of the year detailing gains and losses to do your taxes?

Nowadays, the broker sends good information, however, I‘ve found errors at times on the cost of shares I’ve sold. I would either keep copies of each confirmation of stock purchases or write them down on paper, match them with proper shares sold. That way I can just check these off against the summary of transactions my broker provides. I make a lot of trades, though most are in my IRA and it is unnecessary to keep paperwork since they aren’t taxable events. However, I like to see where I stand on trades, keep paperwork until sold, then toss them.

 

[lz]

Yeah, I get that.. Is it fair to say that investing in a few broad tech index funds will, more than likely, return a gain that's more than a savings account? I'm not trying to pick something super risky. I'm talking AMD, Apple, MS, Cisco, maybe some larger dividend stocks.

I will say, it does make me want to keep half of that money in cash, in case of a catastrophic crash that would nuke earnings. So I get what you're saying.

I’m starting to mix in a few solid, somewhat boring stocks with the techs like JNJ, and back in the late 1990s crash, I found all techs were considered risky by wild eyed sellers, including the types you mention above and funds I held. That really surprised me!

 

[Chuckinden]

Great thread, love following it. Not a trader, yet, I monitor mine and my wife's IRA's. No stocks, just mutual funds, and her 403b at work.

Anyway, who keeps track of all these purchases and sells for tax purposes? The individual or does the brokerage send you a nice form at the end of the year detailing gains and losses to do your taxes?

Same here. I signed up for an account with Fidelity a month ago with $7K, but now trying to figure out how to purchase some individual stocks on the account.

 

[exemjr]

Same here. I signed up for an account with Fidelity a month ago with $7K, but now trying to figure out how to purchase some individual stocks on the account.

I did the same about 2 weeks ago with 5k. I bought Apple and Intel stocks. Just looking to get more ROI than a savings account. Going to keep around 6 months emergency fund in savings and invest the rest. Not going to get rich like this for sure, but better than keeping idle in a savings account imo.

 

[BlueRaider22]

and if I'm reading correctly, you did all your trading WITHIN the retirement accounts?? I probably should look into that,

Think of each individual account as a box. You have your 401k box, your 529 box, your IRA/Roth boxes, and your brokerage box.

Although some may differ, but here are what my boxes look like that I have through Fidelity.




1. 529 College Savings box - I never got to choose what I'm invested in........I was just stuck with a turtle fund. I can't make trades inside the box.......and if I try to remove it from the box I'll get hit with hefty penalities. I can make contributions......but that's about it. It just is what it is.

2. 401k - My employer and Fidelity set up a list of about 20-30 different investments for me to choose. I can choose what to invest it of the 20-30 investments given.......but that's about it. I can't trade within the account. It just is what it is.

However, what is nice is that I can make little loans or emergency withdrawals from my 401k. For example, a co-worker of mine used his 401k to kill a high interest credit card debt that they were struggling to pay off. Yes, they got hit with a little penalty, but it wasn't nearly as much as what they would've paid with the credit card company. And they are young enough to make up the reduction in the 401k.


3. IRA/Roth - I have a Rollover-IRA and a Roth IRA. I can make trades......and choose to invest in just about anything I wish. There are NO taxes.......UNLESS, I try to take money/shares/assets out of the box. I can pretty much do whatever I want to do except remove things from the box.

4. Brokerage - This is where Short and Long Term capital gains taxes come into play.

 

[BlueRaider22]

I did the same about 2 weeks ago with 5k. I bought Apple and Intel stocks. Just looking to get more ROI than a savings account. Going to keep around 6 months emergency fund in savings and invest the rest. Not going to get rich like this for sure, but better than keeping idle in a savings account imo.

A better way to look at investing is that you WILL get rich.........it's just a question of "how long will it take?"


For example: You put in $5,000.......and never put anything more in. Assuming you get an average of 8% interest per year.
10 years from now you will have ~$9,890
20 years - ~$19,538
30 years - ~$38,574
50 years - ~$150,242
100 years - ~$4,500,000



Now let's say that you put in $5,000.....and then put in $5 per day. (for the calculator provided below, it only allows me to put contributions in monthly......so, we'll choose $152/month which is almost $5/day)
10 years - ~$36,441
20 years - ~$99.809
30 years - ~$227,522
50 years - ~$1,000,000
100 years - ~$34,220,000

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View the latest business news about the world’s top companies, and explore articles on global markets, finance, tech, and the innovations driving us forward.

money.cnn.com

 

[gobigblue812]

I opened a Schwab account in March and I started with $6000. I've been doing the $150 per month as well. My wife and I both have 401ks that we contribute to.

 

[LineSkiCat14]

I did the same about 2 weeks ago with 5k. I bought Apple and Intel stocks. Just looking to get more ROI than a savings account. Going to keep around 6 months emergency fund in savings and invest the rest. Not going to get rich like this for sure, but better than keeping idle in a savings account imo.

Yep, that's my thinking. Maybe if online banks still had around 2 to 2.3% yields, but Ally's dropped down to 0.8. You could put that money into the SPY or something that tracks the SP500 and do much better. And while you might not get rich, it gives you some money for the bigger things.. vacation, down payment, an engagement ring. I

 

[LineSkiCat14]

Think of each individual account as a box. You have your 401k box, your 529 box, your IRA/Roth boxes, and your brokerage box.

Although some may differ, but here are what my boxes look like that I have through Fidelity.




1. 529 College Savings box - I never got to choose what I'm invested in........I was just stuck with a turtle fund. I can't make trades inside the box.......and if I try to remove it from the box I'll get hit with hefty penalities. I can make contributions......but that's about it. It just is what it is.

2. 401k - My employer and Fidelity set up a list of about 20-30 different investments for me to choose. I can choose what to invest it of the 20-30 investments given.......but that's about it. I can't trade within the account. It just is what it is.

However, what is nice is that I can make little loans or emergency withdrawals from my 401k. For example, a co-worker of mine used his 401k to kill a high interest credit card debt that they were struggling to pay off. Yes, they got hit with a little penalty, but it wasn't nearly as much as what they would've paid with the credit card company. And they are young enough to make up the reduction in the 401k.


3. IRA/Roth - I have a Rollover-IRA and a Roth IRA. I can make trades......and choose to invest in just about anything I wish. There are NO taxes.......UNLESS, I try to take money/shares/assets out of the box. I can pretty much do whatever I want to do except remove things from the box.

4. Brokerage - This is where Short and Long Term capital gains taxes come into play.

I've thought about setting up a 529. I know it can be used on more than just college tuition, and used for anything educational related. But aside from the tax implications, isn't it smarter to just open a separate brokerage account and get some savings in for future college? The thought being, why lock yourself into a 529's restrictions? Maybe you don't have kids, maybe they don't want to go to college. I mean, who knows what college will even look like in 20 years.

 

[BlueRaider22]

Yep, that's my thinking. Maybe if online banks still had around 2 to 2.3% yields, but Ally's dropped down to 0.8. You could put that money into the SPY or something that tracks the SP500 and do much better. And while you might not get rich, it gives you some money for the bigger things.. vacation, down payment, an engagement ring. I

Even if you're getting 2-2.3%, you're basically meeting inflation......or coming in just under it. Inflation is roughly 2-3% per any given year. If you have money sitting there and you are not gaining interest greater than that.......then you are LOSING money.



Absolutely set up an emergency fund in cash that you can get to quickly........but after that, invest. Even some nice/safe bond funds can get you >5-6%.

 

[gobigblue812]

Question on capital gains tax. I own AAPL and got the split. When I decide to sell, will the original purchase date count or the date the split occurred?

 

[lz]

Question on capital gains tax. I own AAPL and got the split. When I decide to sell, will the original purchase date count or the date the split occurred?

If you sell, on Form 1040, Sch D, you would show the original purchase date. Believe it was 4 for 1? Just divide your cost per share originally by 4 and that’s the cost per share you show on Sch D.

 

[BlueRaider22]

I've thought about setting up a 529. I know it can be used on more than just college tuition, and used for anything educational related. But aside from the tax implications, isn't it smarter to just open a separate brokerage account and get some savings in for future college? The thought being, why lock yourself into a 529's restrictions? Maybe you don't have kids, maybe they don't want to go to college. I mean, who knows what college will even look like in 20 years.

This is exactly what we were going through about 10 yrs ago. Our first child was still in diapers and we were trying to decide whether to divert funds to a 529 or something more flexible. We ultimately decided to put the lion share into our brokerage account thinking that an additional income could be used for anything we wanted......but we still funded the 529 a little. As the 3rd income of the brokerage account grew to something substantial.....and we had more insight into our children......we started to put more into the 529.


Interesting fact though. The 529 does have "some" flexibility. For example, if your child gets a scholarship for $5000/semester, you can withdraw $5000 from the 529 to use on anything you want.......you have to pay capital gains tax......but you can use it for anything.

I had a patient about 10 years ago who recently retired. Him and his wife had some leftover 529 money that their kids didn't use. Sooo, he enrolled in a college in Hawaii.......he and his wife stayed in a family housing/apartment unit.......he took a small amount of "fun" classes like surfing, cooking, etc.......and they lived the entire semester in Hawaii blowing through the rest of the money.

 

[jameslee32]

If you sell, on Form 1040, Sch D, you would show the original purchase date. Believe it was 4 for 1? Just divide your cost per share originally by 4 and that’s the cost per share you show on Sch D.

My long term holdings always show various in the date field but my online tax program imports all capital gains and dividend data so all I have to do is double check it before filing.

 

[jameslee32]

Semi's are back on the horse this week in a big way!

As far as the election, it's always prudent to take profits right about now or whenever you have a nice gain but in the longer term it's not going to matter a whole lot who wins. Stocks have done extremely well under D's and R's.

 

[jameslee32]

I've thought about setting up a 529. I know it can be used on more than just college tuition, and used for anything educational related. But aside from the tax implications, isn't it smarter to just open a separate brokerage account and get some savings in for future college? The thought being, why lock yourself into a 529's restrictions? Maybe you don't have kids, maybe they don't want to go to college. I mean, who knows what college will even look like in 20 years.

I'd like to see opinions from lz and Austin on this question frankly.

 

[lz]

My long term holdings always show various in the date field but my online tax program imports all capital gains and dividend data so all I have to do is double check it before filing.

Right, but I always double check those programs, sometimes they match the wrong or improper shares I bought, can make a big difference in the gain or loss. I only want accuracy when dealing with the IRS, not trying to screw them!

 

[lz]

I'd like to see opinions from lz and Austin on this question frankly.

James, no opinion to offer on them, no children and not up on it for tax clients back when I prepared them.

 

[lz]

Semi's are back on the horse this week in a big way!

As far as the election, it's always prudent to take profits right about now or whenever you have a nice gain but in the longer term it's not going to matter a whole lot who wins. Stocks have done extremely well under D's and R's.

And when a new party takes over, they well may cancel tax rules set up by the previous administration...never ending!

 

[BristolCat]

Question on capital gains tax. I own AAPL and got the split. When I decide to sell, will the original purchase date count or the date the split occurred?

You won't be taxed on the price of the stock, you'll be taxed on your net gains. So whether the stock splits or not, you've got a set amount of money you've put in AAPL. Then that total went up or down. That's what you'll be taxed on. The split has no effect on that.