Investing 102

[silvermonte]

Thank you for your input. I have another question. You suggested I start looking into a roth since im a lower income so I started looking into it. Ive managed to figure out most of what I need to know. Where Im confused is how to use the account.

How I understand the best way to use the account is I set up an automatic payment to the Roth account from my paycheck that ends up in the "cash fund", where the money will sit till I pick a place (stock) to put it in.It will only let me add to the account till I hit the cash cap limit. To limit the amount of fees I pay I should wait till I have a decent amount saved up to buy the stocks, say $1000 or wait till i have $1500 to scale in. Then continue to do this every $1000-$1500 till I retire.

Where my confusion is that once the money goes into the account any growth inside is tax free. Well what happens if you end up with a crappy stock that has losses for 5 years in a row or zero gains and you have to sell. That money will now go back to the "cash fund" but will still be in the roth account, does this sell if there was any gains or anything of that sort have to have taxes paid on it since I will be below retirement age, and will it be part of my yearly money cap for what im allowed to put into the account.

I read that im allowed to pull out my contributions at anytime without tax or penalties, but Im wondering what is considered pulling out? I would think that would only be money pulled out of the actual account and into a bank and not the cash that could possibly be bouncing around in Roth account. Im not wanting to do that since im aiming for long term but i want a solid grasp of what im doing and what could possibly happen while im planning my attack.

[GregWeld]

Originally Posted by silvermonte

Thank you for your input. I have another question. You suggested I start looking into a roth since im a lower income so I started looking into it. Ive managed to figure out most of what I need to know. Where Im confused is how to use the account.

How I understand the best way to use the account is I set up an automatic payment to the Roth account from my paycheck that ends up in the "cash fund", where the money will sit till I pick a place (stock) to put it in.It will only let me add to the account till I hit the cash cap limit. To limit the amount of fees I pay I should wait till I have a decent amount saved up to buy the stocks, say $1000 or wait till i have $1500 to scale in. Then continue to do this every $1000-$1500 till I retire.

Where my confusion is that once the money goes into the account any growth inside is tax free. Well what happens if you end up with a crappy stock that has losses for 5 years in a row or zero gains and you have to sell. That money will now go back to the "cash fund" but will still be in the roth account, does this sell if there was any gains or anything of that sort have to have taxes paid on it since I will be below retirement age, and will it be part of my yearly money cap for what im allowed to put into the account.

I read that im allowed to pull out my contributions at anytime without tax or penalties, but Im wondering what is considered pulling out? I would think that would only be money pulled out of the actual account and into a bank and not the cash that could possibly be bouncing around in Roth account. Im not wanting to do that since im aiming for long term but i want a solid grasp of what im doing and what could possibly happen while im planning my attack.

These are questions that should only be discussed with your accountant -- or someone that is clearly qualified to help you with those questions. Don't take advice on tax questions from just anyone that "thinks" they know.


I've never had a ROTH account (I don't qualify) so I have only a very basic knowledge of how they work.

You have very good questions by the way.

I am pretty sure you have until "tax day" to fund a ROTH.... at least that's the way it used to be... In other words you had until April 15th to fund "last years (the taxable year) account". But here again -- seek some professional help with these questions. Taxes are complicated and can really trip you up down the road - just when you "thought" you were doing things right.

I can still remember finding out (many years ago) about the "wash sale" rules.... Oh yeah! That cost me big time!

[silvermonte]

thanks for you help again, i guess i prolly should set up a meeting with someone to get some of the these questions answered. Im able to figure out most of what i need, and I will be setting up the payments to the roth directly from my paycheck a little at a time that way the money gets there. Ive found out that if I dont do direct payments to my stuff I tend to forget to do them or tell myself ill do it later and just add extra money to the next payment and we know how that goes for most people.

[GregWeld]

You're welcome Silvermonte. Taxes are too "personal" as in there's too many rules etc that apply to the individuals personal tax situation. That really needs to be gone over with a "tax professional".

I also agree that most people benefit from automatic deductions. You get accustom to the new net and never miss the deduction.

If you read this thread -- you'll run into discussions that are critical to you.. you "sound" relatively young -- and time is on your side. Starting this strategy EARLY is the sure way to success even if you're only a mediocre investor. Much of the focus of this thread is about just being the steady "tortoise" that wins the race.

[GregWeld]

I don't know about the rest of you guys -- but if you invested in ANYTHING even as little as 6 months ago -- you should have nice gains by now!!!!


Okay -- but really -- this is the most amazingly easy market to have invested in that I can remember since 1997/98/99.... I used to get up in the morning - buy half a million bucks worth of Dell and of Microsoft and of Cisco -- an hour later I'd sell them UP 50 cents a share - and go off and play golf or work on something in the shop. It was so easy that baby in the E*Trade commercials could do it! Well.... I feel the same way about this market.

Here's going to be my point though.... it's almost too easy. And if you're just starting out... your sense of "the market" is going to be that you just put money in and it grows every day. Trust me when I tell you that this is not NORMAL! But it's markets like this that can make you some real gains --- and then there's markets that go down every day -- and they just cut you a little bit every day again and again and again. "The death of a 1000 cuts". YOU'LL need to remember these fantastically good times -- when the poo market does (and it will) comes around.

Here's the way I look at this ---- and the charts will confirm it.... If you have a run and are up 50%.... and then we get into a period where we go DOWN 20%.... Your down 20% is off of the UP 50% so you're still ahead... Think of it like a person that bought a house 25 years ago... and it tripled in price -- then went down 40%... they're still WAY ahead! And when it comes back (like it has in many areas) they'll be back to near their triple. Are ya gonna cry for them? NO!

The savior in a down period -- is that dividend is buying more shares at cheaper prices... and when the market comes back - you'll have a better return on those shares.

I just don't want people to think they're somehow brilliant investors and that they should hawk everything they have to invest in the market. Just keep doing what you're doing because there will come a time when you're going to be thinking -- WHY THE HELL DID I LISTEN TO THAT IDIOT WELD!?!?! And then the sun will come out and all will be good again. Hard to believe that when it's all going badly --- just as it is when things are going so friggin' well like they are right now.

[WSSix]

Oh, I know I'm not a brilliant investor. That little man who likes to kick people kicked me on my gamble choice, lol. It went down just a touch the day after I bought. Nothing serious at all but funny none the less. Oh well, the buying power of the dividend payment might just buy me even more than I had planned on originally. I do like the streak KO is on though. Wonder if these soda bans are having the same affect on KO that the gun/ammunition scares are having on gun stocks and profits. Maybe everyone's stock piling two liter bottles and mega-cups just in case the worst happens. I wonder is Solo cup is publicly traded

[GregWeld]

The beauty of Coke (KO) is to pull up a "all" chart..... look along the bottom and see that it has SPLIT FIVE TIMES since 1986.... Yes that's a long time ago - but if you were just 33 years old in 1986 (like I was) and you'd bought 100 shares.... You'd now have 4800 shares and that's if you never re-invested the dividend!

[Tony_SS]

Bitcoin

discuss.

[toy71camaro]

Originally Posted by Tony_SS

Bitcoin

discuss.

Did a quick read on it from their wiki... a little to high tech for my likes. Being in the tech industry and see what can/will/does go wrong is a little scary. lol

[Tony_SS]

Originally Posted by toy71camaro

Did a quick read on it from their wiki... a little to high tech for my likes. Being in the tech industry and see what can/will/does go wrong is a little scary. lol

It's takes some research to wrap your mind around it, but it's all open source, uncontrollable by anyone other than the market who is buying into it and trading it. It's certainly nothing that has ever been done before.

I knew about 2 years ago when a bitcoin was .02 each. I didn't listen.. kicking myself now! They are worth $77 dollars today and are climbing due to the EU/euro/Cyprus stuff.