Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Rondar on December 10, 2009, 10:51:19 AM
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I need to put some moolah in my IRA for the tax year of 2009. It will be in mutual funds. I know that at the end of the month, at least for the funds I am in, capital gains and dividends are paid. If I put the money in now, I know I will get paid the cap gains and dividends for the extra shares. But when the gains and div are paid, the price will drop accordingly to match, but I will have more shares next year to work with.
So, is it better to put the money in now, claiming it for the tax year 2009, in essence buying a dividend, or wait until next year when the share price is down and having the whole year so to speak, and getting a few more shares for the same money invested after getting the extra shares in dividends and cap gains?
Hope I make sense of this to you guys. I went out and worked my A double S off for a couple weeks helping a neighbor with his harvest and I got a little extra I was not counting on this year. I was hoping to make the best investment I could and hopefully do it before something else came up and I spend the money instead of doing something wise.
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Put the money in now. Remember you don't pay capital gains tax on investment or returns unless you cash it out. If your gains are taken out within a year, you pay short term capital gains tax on it. If you take cash out after a year (or many years as in retirement), you play long term capital gains which is less.
As far as your dividends are concerned, you can have those rolled into your stock or mutual fund.
Keep in mind also that you only pay capital gains on 'gains'. Since everyone has been losing their prettythang in the market this last year, paying capital gains is the VERY least of peoples problems right now. As my accountant says, if you are paying capital gains it means you are making money.
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right now, I'd buy gold
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right now, I'd buy gold
I'd research that very thoroughly.
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right now, I'd buy gold
beat me to it, that's the first thing I thought of after reading his post :aok
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Ok, I can think about it anyway... where do you buy gold (other than a coin dealer), what kind of gold, ie gold mine shares, bullion, coins, etc?
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If you buy gold better hope the economy does not pick back up.....
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Keep it simple.
Just go down to Charles Schwab and open yourself a nice little retirement account, it is called an IRA (Individual retirement account), they are free, and the guy there will give you some basic advice and understanding.
There are two basic types, a Roth and Traditional IRA. With a Roth IRA, you put money in after you've paid taxes on it. However, you are not taxed on any of the capital gains. So when you retire, and take the money out, all of it is yours tax free.
A traditional IRA is where you put in money before it is taxed. If it is money you have already paid taxes on (like from a paycheck), you simply list that in your income tax return and uncle sam pays you back those taxes on that money in the form of a tax refund.
With either of these two IRA's, you can then distribute the money however you want inside those accounts. You can invest some in individual stocks, like apple or exxon. And you can invest some in mutual funds, which are managed accounts with thousands of participants, investing in broad ranges stocks. Or you can even invest in bonds, which are low risk but low yeild.
With a mutual fund, most experts will say buy one that is no load (load is an 'extra' fee charged for the privaledge of giving them your money to manage, charged up front or when you pull out) and low management fee. Charles Schwab has a ton of them to chose from.
Go to About.com and type up retirement investment. After about an hour or two of reading, you can get a basic understanding of retirement investment.
Don't procrastinate. This is a good time to get in. :x
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If you buy gold better hope the economy does not pick back up.....
That doesn't really make sense.
Gold isn't a hedge against a bad economy, it is a hedge against inflation. And you can have inflation in a great economy. In fact, the recent run-up in gold prices (over 12% in the last few months) means that a lot of investors with a LOT of money are betting on a hefty dose of inflation in the future, no matter what the stock market or economy does. And guess what... one major source of that expected inflation, the health care bill, is making progress in both chambers of congress. No matter what sort of bill passes, it will put the govt deeper into deficit spending and taxes will rise. More debt will eventually mean the money supply must go up, and that means the value of the dollar goes down. Commodities keep their value no matter what the value of the dollar, and that's why commodity prices are rising, because the big investors are banking on an inflationary period.
You may or may not agree on those points, but who cares. The fact remains that the price of gold is going up out of fear of inflation, and the rise is rapid enough to indicate that major players are involved in buying gold even though the stock market has nearly erased the losses from 2 years ago. This situation, a rising stock market combined with fearful "big" investors pouring money into gold, is a fact beyond dispute.
As far as the mechanics of investing in gold... You have a couple of basic options if you want to start right now.
First, if you prefer physical risks with your investment instead of trusting mutual fund managers and other factors, you can just buy gold coins and keep them somewhere safe. There are online sources, or you can find a reputable coin shop near your house and just buy from them. Keep in mind that the federal govt is scared about people doing this, so purchasing more than $10,000 in precious metals each calendar year must be reported to the govt. Risks involve not only the usual risk that the price of gold might go down, but also include the chance of getting robbed. You can keep your gold in a safety deposit box, but the fees on a safety deposit box in most banks will eat cash. But since you're buying gold because you don't trust that your cash will be worth as much tomorrow as it is today, spending cash to preserve a physical asset like gold is actually not that bad of an idea. I know a few guys who are very concerned with the future of the dollar, and they are regularly buying gold coins... with cash, to avoid any records of the purchase. A bit paranoid, but if things go to crap they'll be doing better than most.
Second, you can invest in precious metals mutual funds. I personally invest in the USAA precious metals and minerals fund, and it has given me some huge returns over the last couple of years. This is "safer" in the sense that as long as you invest in a fund that isn't run by crooks, it is unlikely that your money will be stolen. The investment risk that the fund will decrease in value is at least as high as the risk that the price of gold will drop, plus you are more subject to short-term fluctuations in market values because you are directly exposed to the effects of other investors moving money in and out of the individual investments that the fund has invested your money in. Also, many of those precious metals and mineral funds will invest in non-US companies or in US companies with assets held outside the US, and as we all know from the example set by Venezuela recently, some governments have no problem with nationalizing privately held assets like oilfields and mines. So a mutual fund is also exposed to risk from loss of assets due to government seizures. And guess what - if runaway inflation actually occurs, you are more likely to see governments take desperate actions like seizing the assets of US companies.
There are other options (buying gold and having a third party hold it for you, buying gold-backed securities or bonds, etc), but these two are the easiest basic options for the little guy. As others have said, you MUST do your research first... Personally, I've done enough research recently to know that a lot of very smart and very rich people are buying commodities, and the price of gold has been steadily climbing as a result. Yea it might go back down, but the way our country's finances are going I don't think even a resurging economy will do much to hold back the inflation that will inevitably occur as a result from the current US government spending plan.
Finally, if you're not comfortable holding gold coins, I recently read that the price of silver is abnormally low when compared to the price of other commodities. Buying a stack of real silver dollars from a coin dealer is a good way to get your feet wet when it comes to buying precious metals. They don't need to be from a mint or in "proof" condition either... Silver in the form of tarnished bulk coins is essentially the same as buying silver bullion, but the coin format can make it easier to buy and sell because it is in a commonly accepted form, weight, purity, etc. and prices ought to be pretty well universally agreed upon at the time you buy or sell.
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Dredge has it right... Now is a great time to start, and Schwab is a really good investment firm. You can either use their own in-house funds for your IRA, or hunt around for other highly rated investments.
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If your going to buy Silver, buy it in raw silver bars that way your only paying market price Per OZ of Silver, Coins youll be paying almost twice the price. #1 for the weight of Silver and #2 The coins age/value, i have about 6 lbs of .999 silver all in Bar form and close to 29 Silver Dollars, With alot luck and time hopefully the price of Silver will go up alot.
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If your going to buy Silver, buy it in raw silver bars that way your only paying market price Per OZ of Silver, Coins youll be paying almost twice the price. #1 for the weight of Silver and #2 The coins age/value, i have about 6 lbs of .999 silver all in Bar form and close to 29 Silver Dollars, With alot luck and time hopefully the price of Silver will go up alot.
Not true. The local coin dealer sells silver dollars at a very small markup from silver bullion prices, and any tarnish on them simply helps prove that they are not fakes.
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right now, I'd buy gold
I would buy farmland, it's cheap 2-3000$/acre in some places,when i was born in 1970 ,the world population was 3.7 bil, today we are over 6 billions but the Earth has same size and peoples don't eat gold and paper.
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right now, I'd buy gold
I guess Glenn Beck told you to.
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I bought gold in may of 2007. So far ive seen a nice profit from it but ill hang on to it for another 20-25 years. It has beaten bank interest and its about as safe as having money in the bank.