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Re: Tax strategies with Employee stock option execution

Are you eligible for your company's executive deferred compensation plan? If so, that is a way to contribute dramatically more to a tax-deferred plan and as a result lower your taxable income. Let's say you defer your salary and/or bonus which amounts to $200,000 and you simultaneously exercise opti...
by Wagnerjb
Wed Jul 30, 2014 10:29 am
 
Forum: Investing - Help with Personal Investments
Topic: Tax strategies with Employee stock option execution
Replies: 4
Views: 287

Re: Stocks: losing money for 20-30 years not uncommon

MindBogler wrote:Obvious answer: don't invest in a single country's stock -- diversify globally.


My thoughts exactly!
by Wagnerjb
Tue Jul 29, 2014 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: Stocks: losing money for 20-30 years not uncommon
Replies: 43
Views: 3996

Re: Owning individual stocks to harvest tax losses

Beliavsky: you might be able to do this, but remember for TLH to work you must invest in something extremely similar and come back to the original as soon as possible. This is harder to do with stocks and much easier to do with ETFs that are more specific than the usual (e.g. sector or country). Le...
by Wagnerjb
Tue Jul 29, 2014 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: Owning individual stocks to harvest tax losses
Replies: 17
Views: 962

Re: Tell me why I shouldn't buy individual muni bonds

However, even in CA which is much larger and diversified (I pay no attention to the supposed financial problems of the state, btw, since I'm getting paid for those thru yields if the market agrees) I don't hold or recommend over 50% of the bonds in one state. Fred indicated that this portfolio woul...
by Wagnerjb
Tue Jul 29, 2014 1:29 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tell me why I shouldn't buy individual muni bonds
Replies: 31
Views: 1884

Re: Owning individual stocks to harvest tax losses

Since brokerage commissions are low nowadays, and bid-ask spreads are tight, it should be possible for investors with large-enough portfolios to outperform index funds on an after-tax basis, Some years I have a negative tax rate on my investments. I might have a $3,000 tax loss to deduct (at a 33% ...
by Wagnerjb
Tue Jul 29, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: Owning individual stocks to harvest tax losses
Replies: 17
Views: 962

Re: Tell me why I shouldn't buy individual muni bonds

Fred: your strategy is logical and well laid out. I am considering the same strategy myself when I retire in a year or two, although I will retire in Texas and not have the state income tax benefit that you will. I am well aware of the risk of paying a premium for bonds that are purchased through a ...
by Wagnerjb
Tue Jul 29, 2014 1:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tell me why I shouldn't buy individual muni bonds
Replies: 31
Views: 1884

Re: Owning individual stocks to harvest tax losses

I do exactly as you suggest. I hold low-cost passive funds for Small Caps, International, REIT and fixed income. For my US Large Cap portfolio I hold between 30 and 40 individual stocks in my after-tax account. I aggressively tax manage that portfolio. I have been holding individual stocks (as well ...
by Wagnerjb
Tue Jul 29, 2014 12:42 pm
 
Forum: Investing - Theory, News & General
Topic: Owning individual stocks to harvest tax losses
Replies: 17
Views: 962

Re: Do any boggleheads invest in individual companies?

However back to the general case, IMO those who would make a statement like 'you should have 50-100 individual stocks if you do it 30 *might* be OK' (50-100 is ridiculously too many from a practical POV, even 30 might be stretching it in that respect) are assuming the single stock investor is tryin...
by Wagnerjb
Tue Jul 29, 2014 12:03 pm
 
Forum: Investing - Theory, News & General
Topic: Do any boggleheads invest in individual companies?
Replies: 95
Views: 5228

Re: Do any boggleheads invest in individual companies?

A handful is significant uncompensated risk, but the function is an asymptote. 50 is more diversification that 15, but little more. At infinity the ratio of std deviation of portfolio of stocks (which have strictly uncorrelated idiosyncratic risk) is 39% as much as 1 stock. At 50 it's 41%, at 15 it...
by Wagnerjb
Tue Jul 29, 2014 8:50 am
 
Forum: Investing - Theory, News & General
Topic: Do any boggleheads invest in individual companies?
Replies: 95
Views: 5228

Re: Tax Free Karate Kid

I have done exactly that. I gifted money to the child, and made decisions (as Custodian) on how to spend the UTMA funds on discretionary expenses such as the karate lessons you mentioned. Some might give you a moral argument against this practice, but I won't. And an awful lot of people do this. I c...
by Wagnerjb
Fri Jul 25, 2014 4:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tax Free Karate Kid
Replies: 1
Views: 316

Re: Make Income the Outcome

Whether or not a more conservative portfolio is the most appropriate way to ensure a desired income stream is still open to question. We actually know that if the wanted withdrawal rate is high enough and the portfolio too conservative, that the outcome is disaster. The entire premise of the "...
by Wagnerjb
Fri Jul 25, 2014 3:51 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3826

Re: Make Income the Outcome

Here's a football analogy. With 6 minutes to go, possession of the ball, and a 9 point lead a team can maximize its expected pointed total by throwing lots of medium and long passes, but the goal of winning the game is not maximized by employing this strategy. BobK But doesn't a glide path to conse...
by Wagnerjb
Fri Jul 25, 2014 1:07 pm
 
Forum: Investing - Theory, News & General
Topic: Make Income the Outcome
Replies: 49
Views: 3826

Re: Bonds beat stocks over the last 15 years

The equity premium can be negative for long periods of time (as can the value, size, and I would argue, momentum premium). The benefit from exposure to these factors comes from long-term discipline to stay the course. Does a 5.25% return on equities mean that the equity premium was negative? I woul...
by Wagnerjb
Thu Jul 24, 2014 9:07 am
 
Forum: Investing - Theory, News & General
Topic: Bonds beat stocks over the last 15 years
Replies: 93
Views: 7754

Re: Taxable Accounts - Am I thinking about this the right wa

Epsilon Delta wrote:The zero tax in retirement threads basically amount to "After decades of tax mismanagement, during which you paid more taxes than you needed to, you finally get to claw back part of the overpayment."


I agree 100%
by Wagnerjb
Wed Jul 23, 2014 12:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Taxable Accounts - Am I thinking about this the right way?
Replies: 30
Views: 2727

Re: Taxable Accounts - Am I thinking about this the right wa

I am not in the OP's situation (so I am not sure), but here is what I think is happening, and the $10k estimate may be valid after all: The $56k in interest income is essentially offset by the $52k in deductions and the personal exemptions. That leaves $134k in capital gains and (presumably qualifie...
by Wagnerjb
Wed Jul 23, 2014 12:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Taxable Accounts - Am I thinking about this the right way?
Replies: 30
Views: 2727

Re: Taxable Accounts - Am I thinking about this the right wa

Married filing jointly, $20,000 property tax paid and $32,000 given to charity. No other relevant deductions. Somebody in this situation (lots of after-tax equity investments and making sizable donations) should probably be donating highly appreciated securities instead of cash. In addition, this p...
by Wagnerjb
Wed Jul 23, 2014 9:09 am
 
Forum: Personal Finance (Not Investing)
Topic: Taxable Accounts - Am I thinking about this the right way?
Replies: 30
Views: 2727

Re: Taxable Accounts - Am I thinking about this the right wa

DFAman, I am getting somewhat different numbers using Taxcaster. I inputted the following into the Taxcaster "other income" category: * Interest = $64,000 * Dividends = $96,000 * Gains / Losses (long term) = $50,000 (this corresponds to the $160,000 withdrawal making up the rest of your 4...
by Wagnerjb
Wed Jul 23, 2014 9:02 am
 
Forum: Personal Finance (Not Investing)
Topic: Taxable Accounts - Am I thinking about this the right way?
Replies: 30
Views: 2727

Re: Vanguard not vigilant about taxes?

What if Medtronic was bought by a larger US company? Wouldn't the shareholders still have to pay capital gains tax on the acquisition price? Yes. So why doesn't the New York Times feel that mutual fund shareholders are "paying the price" when a domestic company acquired another one? I susp...
by Wagnerjb
Wed Jul 23, 2014 8:47 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard not vigilant about taxes?
Replies: 15
Views: 1630

Re: Bloomberg rates Large Company 401k plans

I do think it would make sense to negotiate more salary in lieu of a better 401K if one had the leverage to get it. It would probably be the strongest signal to management that a bad plan is a cost to the business. Kalo You would probably say the same thing about a poor medical plan (subsidy too lo...
by Wagnerjb
Wed Jul 23, 2014 8:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Bloomberg rates Large Company 401k plans
Replies: 22
Views: 2270

Re: If you are a winner before fees, why not lower the ER?

2. The winners (after fees) don't stay as winners consistently (no persistence). The problem is that the managers don't truly know if they have persistence or not. So....the manager beats the benchmark for a few years on a pre-expense basis. What to do? If you lower the fees, you lower your income....
by Wagnerjb
Tue Jul 22, 2014 11:55 am
 
Forum: Investing - Theory, News & General
Topic: If you consistently outperform (pre-fees), why not lower ER?
Replies: 35
Views: 1144

Re: Your allocation to Emerging Market small cap ETFs?

I used to own EWX but sold it in frustration due to the unacceptable tracking error. I now own DGS. Yes, I believe in the benefits of improved diversification through international Emerging Markets (and small and value). I understand the data show that these sectors provide better diversification th...
by Wagnerjb
Tue Jul 22, 2014 8:40 am
 
Forum: Investing - Help with Personal Investments
Topic: Your allocation to Emerging Market small cap ETFs?
Replies: 12
Views: 1188

Re: I'm a genius!

Will do good wrote:HomerJ- You are a genius.

Wait I'm a genius too, I stayed the course :sharebeer


Wait....I rebalanced in March 2009. I guess that makes me a member of the Genius club too :D :D
by Wagnerjb
Tue Jul 22, 2014 8:33 am
 
Forum: Investing - Theory, News & General
Topic: I'm a genius!
Replies: 19
Views: 5156

Re: Minimizing Capital Gain Tax

Gift the appreciated shares to your daughter. When she is ready to attend college she can sell them (in tranches if necessary). She will use those funds to pay for college costs, and she will claim the American Opportunity Tax credit (confirm that this hasn't expired first). The AOT credit will offs...
by Wagnerjb
Thu Jul 17, 2014 1:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Minimizing Capital Gain Tax
Replies: 10
Views: 1156

Re: Pre tax vs. after tax retirement investing

I am in a similar situation in that I am in the highest tax bracket, and I have a choice of a Roth 401k or a regular 401k for my contributions (I am 25 years older than you). I am choosing the regular 401k plan and taking the tax deferral today. My concern is that future tax law changes may result i...
by Wagnerjb
Wed Jul 16, 2014 12:14 pm
 
Forum: Investing - Help with Personal Investments
Topic: Pre tax vs. after tax retirement investing
Replies: 15
Views: 1533

Re: Boglehead Rules Of Thumb To Investing?

I am just wondering what you personally would consider to be the overall Bugleweed rules of thumb to investing? I know this is a broad question since there are so many aspects to investing (age, income bracket, etc). But I’d like to narrow it down to the basics. Judging from all of the posts I’ve r...
by Wagnerjb
Fri Jul 11, 2014 8:29 am
 
Forum: Investing - Help with Personal Investments
Topic: Boglehead Rules Of Thumb To Investing?
Replies: 23
Views: 3214

Re: A look at those hot high dividend yield funds,

You could buy a bunch of growth funds (see vanguard explorer) which pay tiny dividends (less than .1% last I looked) but the gain in taxes probably isn't worth the loss of diversification. How about buying growth funds in your taxable account and value funds in your tax-deferred accounts? You could...
by Wagnerjb
Thu Jul 10, 2014 2:05 pm
 
Forum: Investing - Theory, News & General
Topic: A look at those hot high dividend yield funds,
Replies: 9
Views: 2034

Re: Why do companies put up with high expense 401k choices?

Could it be that it costs money to administer a 401k plan? I suspect the reason for the high fee funds is that some companies don't want to absorb the cost of administering the 401k plan, and the financial institution offering the fund lineup says to management, "we will handle the cost of admi...
by Wagnerjb
Thu Jul 10, 2014 8:35 am
 
Forum: Investing - Help with Personal Investments
Topic: Why do companies put up with high expense 401k choices?
Replies: 15
Views: 1520

Re: Oil Royalty LP

If LPs are such good deals, why haven't the big corporations previously bought the assets that the LPs are now marketing? Could it be that there is too much risk? Perhaps you are only seeing the current survivors? How long will the current leases continue to produce? What happens to your money when...
by Wagnerjb
Wed Jul 02, 2014 10:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Oil Royalty LP
Replies: 5
Views: 556

Re: Betterment launches tax loss harvesting

Wealthfront's tax loss harvesting service is interesting, because it replicates the S&P 500 using individual stocks (if you have over 500k worth of funds). It uses extended market ETF for stuff outside. That means you can constantly tax loss harvest. Betterment seems to use ETFs? That seems les...
by Wagnerjb
Sat Jun 28, 2014 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: Betterment launches tax loss harvesting
Replies: 28
Views: 2906

Re: GABUX Big Yielder?

So how do you explain this to the average Joe? Who is starved for investments with yield and looks at the stable price of this fund and shrugs off the details of where the monthly income is coming from? Shouldn't the price be declining if they are returning principal of out about 10% each year?? Bu...
by Wagnerjb
Tue Jun 24, 2014 3:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: GABUX Big Yielder?
Replies: 5
Views: 304

Re: [Poll] How many brokerage firms do you use for investing

I use Vanguard for the bulk, but I also use Fidelity (although only for their low-cost passive funds). I do not intend to consolidate, as the purpose for two companies is to diversify my exposure to catastrophic systems issues (fraud, computer disaster, etc). When I retire and am taking withdrawals ...
by Wagnerjb
Mon Jun 23, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] How many brokerage firms do you use for investing?
Replies: 43
Views: 2038

Re: Betterment launches tax loss harvesting

TLHing to get the $3K/year income tax deduction has value to me. TLHing beyond that doesn't. The excess TLH balances just might come in handy. In my case, my wife inherited half of her childhood home. She and her sister let the tenant stay in the home for a few years, then sold at a very nice capit...
by Wagnerjb
Fri Jun 20, 2014 5:30 am
 
Forum: Investing - Theory, News & General
Topic: Betterment launches tax loss harvesting
Replies: 28
Views: 2906

Re: Commodity no longer a good diversifier?

Thanks Andy. Looks like the cost-benefit doesn't really add up. Plus, we could have been 'too long' given our day jobs are energy related? :) Yes and Yes. I am already very long energy, with a job in energy, Restricted stock in energy and a house in Houston :D So, owning a commodity futures fund is...
by Wagnerjb
Thu Jun 19, 2014 1:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Commodity no longer a good diversifier?
Replies: 22
Views: 1861

Re: [Poll] Did you tax loss harvest in the past?

I have done it many many times over a long period. When I began investing in 1983 I bought a few individual stocks for my taxable account. One of the stocks (Huffy) declined and I sold it for a tax loss a year or two later. I have owned individual stocks my entire investing career. At first I only o...
by Wagnerjb
Thu Jun 19, 2014 1:16 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] Did you tax loss harvest in the past?
Replies: 17
Views: 903

Re: Commodity no longer a good diversifier?

Actually when I think commodity exposure I'm thinking more on the crude oil side than gold. But as you pointed out, a true crude oil ETF might not exist. I am not aware of a pure crude oil ETF, one that owns the actual commodity. By the way, I work in the energy trading department for a major oil c...
by Wagnerjb
Thu Jun 19, 2014 8:40 am
 
Forum: Investing - Help with Personal Investments
Topic: Commodity no longer a good diversifier?
Replies: 22
Views: 1861

Re: Insider Trading & Bogleheads

Okay, please clear something up for me. Perhaps it's me and my misunderstanding of the term "insider trading". In my mind there is a huge difference between "insider trading" and "trading on inside information". Insider trading : Top executives buying or selling large ...
by Wagnerjb
Wed Jun 18, 2014 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Insider Trading & Bogleheads
Replies: 26
Views: 1766

Re: Insider Trading & Bogleheads

it seems to me to be too glib to assert that only active traders lose in such a situation. That it's zero sum and there is nothing to be extracted from naive index investors It is probably more accurate to state that "passive investors" are not hurt. Your example of front-running an index...
by Wagnerjb
Wed Jun 18, 2014 9:12 am
 
Forum: Investing - Theory, News & General
Topic: Insider Trading & Bogleheads
Replies: 26
Views: 1766

Re: Commodity no longer a good diversifier?

Even if your investment has a negative correlation to equities, it matters what the expected return of that investment is. For commodities, the expected return is very low (possibly even negative in real terms). Gold has exhibited this return characteristic, as it has similarly slight negative corre...
by Wagnerjb
Wed Jun 18, 2014 8:40 am
 
Forum: Investing - Help with Personal Investments
Topic: Commodity no longer a good diversifier?
Replies: 22
Views: 1861

Re: Should international travel impact your investments?

Hello, I recently finished a trip to Europe, and visited 5 countries: France, England, Czech Republic, Ireland, and Netherlands. While I really enjoyed the overall trip, there were times where I said things to myself like "This is why some folks keep 100% of their investments in the US" o...
by Wagnerjb
Tue Jun 17, 2014 4:05 pm
 
Forum: Investing - Theory, News & General
Topic: Should international travel impact your investments?
Replies: 30
Views: 1875

Re: Insider Trading & Bogleheads

No. Insider trading moves stock prices up or down to reflect additional information possessed by insiders. In theory, this should increase the accuracy of pricing of individual equities. The same is true of high frequency traders. However, a boglehead investor who just buys equities or sells equiti...
by Wagnerjb
Tue Jun 17, 2014 2:17 pm
 
Forum: Investing - Theory, News & General
Topic: Insider Trading & Bogleheads
Replies: 26
Views: 1766

Re: What to pick: RSU or stock options?

If you feel comfortable managing your income taxes, I would choose the RSU's one year, then choose the stock options in the following year. With alternate year selection, you can maximize your tax management opportunities. Here is how: If you elect to receive RSU's every year, your income will be re...
by Wagnerjb
Tue Jun 17, 2014 9:20 am
 
Forum: Investing - Help with Personal Investments
Topic: What to pick: RSU or stock options?
Replies: 29
Views: 1670

Re: What to pick: RSU or stock options?

You cannot trade employee stock options NQSO on the open market, so the volatility is irrelevant. If the exercise price is above the current fair market value of the stock, then the NQSO is worthless, regardless of volatility. I'm not an expert on NQSO's but in general early exercise is suboptimal ...
by Wagnerjb
Tue Jun 17, 2014 9:10 am
 
Forum: Investing - Help with Personal Investments
Topic: What to pick: RSU or stock options?
Replies: 29
Views: 1670

Re: Daily Tax-Loss Harvesting with Wealthfront

Tax-Loss Harvesting is a transfer of a tax-free loan from government to individual. It's not free money as taxes are eventually due (unless you're talking about things like step basis). So while there are real benefits, they're not always that substantial, and spending a lot of time and money on th...
by Wagnerjb
Mon Jun 16, 2014 4:52 pm
 
Forum: Investing - Theory, News & General
Topic: Daily Tax-Loss Harvesting with Wealthfront
Replies: 8
Views: 915

Re: How can this be legal (employers over-riding employee 40

The article says very clearly - multiple times - that the employee can opt out of the changes. Go find somebody else to sue.....
by Wagnerjb
Sat Jun 14, 2014 11:23 am
 
Forum: Personal Finance (Not Investing)
Topic: How can this be legal (employers over-riding employee 401k)
Replies: 23
Views: 1767

Re: Is the first million really the hardest?

If you were reasonably young in the 1980's, you rode a huge wave. Let's say you were 35 years old and had accumulated $1 million already (this is just hypothetical). At age 35, your AA might have called for 75-80% equities. In the 1980's I believe there were three consecutive years with equity retur...
by Wagnerjb
Thu Jun 12, 2014 3:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Is the first million really the hardest?
Replies: 64
Views: 7770

Re: Exercise stock options to max retirement accounts?

I would not want to give up too much intrinsic value (time value) to accomplish this. If you have some options that are within a few years of expiring, go for it. Otherwise, more information is needed. For example, I don't think I would sell 10 year options after 4 years unless they are way up abov...
by Wagnerjb
Tue Jun 10, 2014 4:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Exercise stock options to max retirement accounts?
Replies: 6
Views: 289

Re: Another Reason to Index

afan wrote:I was hoping someone would explain how he missed the stepped up basis opportunity. Did this mean that a diversified fund would not have had a big distribution and he would have gotten the stepped up basis at death?


Maybe you could IM Livesoft and see if he would explain his comments.
by Wagnerjb
Fri Jun 06, 2014 4:52 pm
 
Forum: Investing - Theory, News & General
Topic: Another Reason to Index
Replies: 26
Views: 2603

Re: "Bracket Management" chart - thoughts?

The 15 suggestions seem to be focused 100% on lowering current taxes, but little regard for other consequences. Why would one want to invest in high-cost or undiversified investments just to achieve a lower current tax burden? Why would you only tax loss harvest in high-income years? Why would you o...
by Wagnerjb
Fri Jun 06, 2014 9:13 am
 
Forum: Investing - Theory, News & General
Topic: "Bracket Management" chart - thoughts?
Replies: 1
Views: 391

Re: Another Reason to Index

Maybe in theory. But in reality, most Boglesaurs didn't have 500 stocks in their portfolios. And many sold the losers to reap the tax loss. So they often ended up with large concentrations of a few highly appreciated stocks. Subject to the risk of one crashing or the risk of one getting bought out....
by Wagnerjb
Fri Jun 06, 2014 8:58 am
 
Forum: Investing - Theory, News & General
Topic: Another Reason to Index
Replies: 26
Views: 2603

Re: Another Reason to Index

Maybe. Maybe not. An actively managed portfolio will not necessarily beat an index either before or after taxes and expenses. I think we are talking about different strategies. I don't think the OP indicated that we are talking about active management, but if so then I agree with you that an index ...
by Wagnerjb
Thu Jun 05, 2014 5:40 pm
 
Forum: Investing - Theory, News & General
Topic: Another Reason to Index
Replies: 26
Views: 2603
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