While reading misc.invest.*, you may have seen people talking about “long-term gains” or “short-term losses.” Despite what it sounds like, they are not talking about investment strategies, but rather a potentially important part of the United States tax code. All this matters because the IRS taxes short-term and long-term gains differently. The “holding period” is
How to Compute Capital Gains
How to Compute Cap GainsContents Gains made on equities (i.e., stocks or mutual funds) are subject to capital gains taxes. In the simplest case, you bought a lot of shares (either stocks or mutual funds) at some date, made no further investments (took your dividends in cash), and finally sold the shares at some later
Capital Gains Cost Basis
This article discusses how to determine the cost basis of a security according to the rules of the US tax code. The most common need for the cost basis of a security like stock is to report the proper gain or loss when that security is sold. This article sketches the issues for the simple
Backup Withholdings
Once the IRS declares you a “Bad Boy” (for having underpaid or been negligent on your tax filings in other ways) they stick you with “Backup Withholding.” What this means, essentially, is that any firm that deals with your money in taxable tranactions is required to withhold (and submit to IRS) 31% of the proceeds
Value vs Growth Investing Strategy
Investors will frequently read about growth stocks and growth strategies, as well as value stocks and value strategies. These terms describe reasons why people believe certain stocks will increase in value. This article gives a brief summary of the investment strategies centered upon finding those stocks. The value strategy attempts to find shares of companies
Stock Investment Strategies
List of Stock Investment StrategiesContents This article offers a brief survey of several strategies that investors use to guide their stock purchases and sales. Before we start the survey, here’s a golden rule of investing: Know why you are buying a particular stock — don’t wait until its price goes up or down to think
When to Buy/Sell Stocks
This article presents one person’s opinions on when to buy or sell stocks. Your mileage will certainly vary. Stock XYZ used to trade at 40 and it has dropped to 25. Is it a good buy? A: Maybe. Buying stocks just because they look “cheap” isn’t a good idea. All too often they look cheaper
Socially Responsible Investing (SRI)
Investors who pursue a strategy of socially responsible investing (SRI) are making sure that their capital is used in a manner that aligns with their personal ethical values–taking responsibility for what their money is doing to the world around them. There are many different definitions of what it means for an investment to be socially
Writing Put Options To Acquire Stock
Is there a stock that you would like to purchase at a cheaper price than its current quote? Would you be interested in receiving premiums months before you have to purchase the stock? If these propositions sound attractive to you, then writing puts to acquire stock is a strategy you should consider in the future.
Buying on Margin
I have used margin debt to leverage my returns several times this year, with successful results. At no time did my margin debt exceed 25% of my net account equity. This is my personal comfort level, but yours may be higher or lower depending on your risk tolerance, your portfolio return vs. the interest rate