Quote:
Originally Posted by GregWeld
I sat here thinking about this --- and for a new investor there's a lot of things they've heard about "investing" that are just so wrong.
I get into lots of conversations with various people - and I love to hear a guy bragging about the big "write off" he's going to take on something. I smile knowingly. I know this guy doesn't know squat about investing or taxes and that he's bragging about something that most likely didn't or isn't going to happen anyway. He THINKS this is the way all the rich guys talk so by mentioning it - he too must be one of them. He's also the same dipsh!t that in the next sentence is going to tell me he pays his VISA off every month.
TAX LOSSES are used to OFFSET (cancel or reduce) GAINS. Those losses and gains have to be what's called REALIZED. You can't have a gain in your account on paper that you haven't actually realized (sold the shares and taken that gain!) and try to sell some losers and "account" for that gain. You have to have sold the gaining shares - and then figure out what you've gained - and then sell some loser shares for the offset.
You CAN NOT - just sell some shares, for let's say 100K loss -- and then try to completely offset your entire years income from working (Ordinary income). It doesn't work that way!!
The tax man doesn't live in a cave somewhere... they write all manor of rules to keep people in line! LOL.
At the end - or coming up to the end - of the year... you'll hear about TAX LOSS SELLING. Yeah -- this is done all the time and is normal... but that selling is only done to reduce (tax wise) the amount of GAINS taken in the same year. It's simply a way to reduce your tax bite on those gains. So in other words you would have had to have realized gains - and then realized losses... This is NOT a way to make a ton of money and write it all off like the big shot bragger dumbass is trying to tell you he's going to do.
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Greg thanx. I'm still learning all this and your way of putting it really makes me understand it (well most of it).
I'm still having a hard time "settling in" with managing my portfolio with transforing my 5 mutuals, while running a successful company and three kids in college. I'm currently "dumbing" down my positions as i can't "do" a spread sheet. My wifey is brilliant at this (spreadsheet management), but she won't spend the time to "manage" it, which will hurt both of us later on if I dont manage it. Right know we're prospering (the biz is worth a fair amount of coin, same with the equity we have in the house, but thats for much much later, which will come sooner than we think).
So for me, reading this when people post new questions or have different perspectives than I do, much education occurs,
In the mean time, The pension i did last year for my company and its employees, has a tax accountant, a third party pension administrator, and will soon be going to a management company to help with managing the growth of the account. I looked into where Schwab's advisors have put the pension monies (mutual fund, and man, the diversification just in the financial sector its like 300+/- banks.
So while I have to do this because of the laws regarding fiduciary responsibility, I advise all my employees to start a Roth IRA, and to read the basic fundamentals of this 102 class....
So, everybody remember a couple of things:
"Its not what you make, its what you keep that matters"
"Its not "timing the market, its time in the market"
If any body doesn't believe that last one, look at the chart before, during, after the great depression, the market came back stronger than before, it just took 15 years...
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for investing your time into this thread, I have been reading this post for some time now (long time listener, first time caller, LOL), anyway .... I am beginning to understand most of the terminology because of my classes I'm taking for my MBA. I do have some money in a Roth and a 401K, but now I can read INTO the report and determine what is best for me.
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