Quote:
Originally Posted by dhutton
Thanks for the excellent detailed response Greg. The stocks are in my IRA so no tax implications when I sell. Most of the stocks I purchased when I started following this thread have more than doubled in value. I’m currently not making any withdrawals and hope not to for another 5 years when I’m 65.
Thanks again, this thread is pure win. It has literally been life changing for my wife and I.
Don
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Ah --- yeah --- I forgot to discuss/mention IRA's and ROTH IRA's -- DEFFERED TAXES on the IRA/401K's and ZERO taxes for those lucky enough to qualify for the ROTH IRA....
Huge gains my friend! And good for you!! Damn I love when I see someone having a little success! I just wish we'd have had this discussion going when I first joined Lat G..... OMG! There'd be some pretty good gains to have seen there! Lot of guys would be retiring "early" and building cars with all the spare cash!! LOL
It really does get a little tricky when it comes to gains and earnings power etc.... because if you hold long enough - and the gains keep coming.... and the dividends keep increasing..... pretty soon (years) -- you're looking pretty dang smart with a simple buy and hold strategy..... BUT being somewhat "active" as in MANAGING your money.... you can be even a bigger winner.... but so much of it depends on how good of a manager you are and what you've learned along the way. I've seen it go both ways.
Example --- a long term best friend would ONLY invest in bonds.... dumb bunny was in bonds even though that cash was tied up in tax free munis while the stock market was roaring.... I finally got him to take 100,000 and put it in Microsoft and Intel and Cisco and Dell etc.... back when the stuff was doubling every 6 months.... in less than a year -- he had (with my active involvement) over 300,000 in the market. Sadly - he could never pull the trigger on the SELL SIDE!! But he had learned he could make way better return in the stock market than he could in bonds.... so that was a major milestone for me. Now --- what he also did ---- WRONGLY --- was when he found something he wanted to buy - he'd buy it in his trading (taxable) account -- and he'd buy it in his IRA!! His problem was - he could stretch or reach out and trust himself to be a decent stock picker (the reason he was in bonds - because that's pretty much a no failure pick). So when he put 100K in Ginny Mae (can't remember the symbol now) and they went to ZERO during the housing bust - he lost all of it (the 100K in that investment). Now ---- it didn't hurt him - because he was already a millionaire and his house and everything else he owned was paid for years ago..... but those are tough lessons. He'd forgotten the 5% rule!! And he'd forgotten the DIVERSIFY rule! He chased YIELD and got greedy when it was going well.... but he forgot all about RISK. Capital preservation is every bit as important as all the rest of it.
I do appreciate his thanks every once in awhile - and he's told me many times that it was my pushing him that made a huge difference in his retirement. These days he has a brand new pickup and hauls a large 5th wheel around and spends his winters in warmer climates.... with not a worry in the world. That is the way to retire!
"Active" management does not mean trading.... what it means is vigilance - and not being afraid to take a loss when you know the pick sucks.... it means taking profits when they're "outsized".... it means asking the good questions just exactly like what was asked here.... it means trying to control risk but not being afraid or frozen like a deer in the headlights. It's recognizing that if you have a 40% gain and the stock market goes south 15% -- that YOU still have a sweet gain and those dividends are going to keep paying! Active is just a term for DON'T FORGET all the rules.... 5% per any investment (okay they grow and creep up to 7% - but don't let them be 15 or 20% - that means you forgot to take some of the gain!!).
WOW --- another book written! LOL