-
Juicing Your Brokerage Returns: Get a Head Start with Free Money!
TL;DR: With free commissions everywhere, brokerage bonuses could become the tie-breaker. IBKR is one to consider. With so many brokerage firms out there, it could be a daunting task to choose where to begin your investing journey. When you choose, here are some important factors to consider: Brokerage bonuses! Commissions + Fees assessed when trading Price Improvement Customer service quality SIPC Insurance Investment products offered Margin/stock lending capabilities For the most part most big brokerage firms (like Schwab, Fidelity, IBKR, etc) will offer pretty competitive points on all of these, and honestly there’s not a huge difference. As a rule of thumb smaller firms you’ll need to check on all…
-
529 Plans: How to Save Tax-Free for Your Child’s Future
TL;DR: 529s are a way to invest and have your money grow tax-free, as long as you spend it on qualified education expenses. Most posts on the internet are INFURIATING because they’re so long and just don’t get to the point. You need to read multiple blogs to get all the info you need. Here, I will have a very short point-by-point summary of the basics, for the maximal useful material/words ratio. What is a 529? An investment account run by states where you can grow funds tax-free, as long as you withdraw and eventually spend the money for qualified education expenses. Each state will have their own program, but…
-
Accredited Investing: Opportunities of the Rich
TL;DR: Now anyone can be an accredited investor with a test. Venture capital, hedge funds, private equity… the list goes on. Because of the hassle, a lot of securities are not registered with the SEC and therefore only available to accredited investors. This meant for a long time, some of the most profitable investments have only been available to the rich. What is an accredited investor? Traditionally, to be an accredited investor you’d have to have a net worth (excluding your place of residence) of over $1 million, or earn at least $200k a year (or combined $300k as a couple). However, very recently, the SEC has changed the definition…
-
SIPC Insurance
TL;DR: Covers $500k (including up to $250k in cash) in the event your brokerage firm liquidates. Last week we looked into FDIC-insurance, and this week we’re going to explore something similar: SIPC insurance. This is to protect your assets/investments in brokerage firms. The key takeaway here is that it insures your investments in brokerage firms that FDIC did not. History: Established in 1970 after the congress passed SIPA, it’s meant to protect investors from failing brokerages. Although it was created under federal law, it’s not an agency or establishment of the United States Government. How does it work? First check that your brokerage is a member of SIPC. A quick…
-
Municipal Bonds
TL;DR: Municipal Bonds are tax-exempt Municipal bonds are ways cities can fund projects like bridges and schools. The main advantage here is that these are federally tax-exempt, which boosts their earning potential higher than federal bonds. They are similarly safe investments, although occasionally they still default (e.g. Detroit). Directly investing in municipal bonds takes some research, capital, and time dedicated to the endeavor. However, you can also invest in ETFs to reap the tax-exemption benefits. If interested, I’d recommend Googling and reading more about it. Happy Muni-bonding! TheJKW
-
Stock Lending
TL;DR: Stock loan is a way to earn extra income on some of your non-blue chip stocks For most stocks (e.g. FB, JPM) none of this applies. However, you might occassionally find yourself holding some more questionable stocks like WATT, or MDXG. This is where you may benefit from lending your shares. How and why does this work? It all starts with short selling. That’s when someone decides to sell a stock they don’t own (to bet it’s going down). To do this, they have to borrow the stock from someone who already owns it and is willing to lend it. They then sell it, and return it later. But…
-
Investing: Tax Tips
TL;DR: Of your investments, put dividend yielding investments in tax-efficient vehicles, and stocks where you expect long-term capital gains in your other accounts. When it comes to taxes on most investments, if you’re like most people, you’ll get taxed whenever you close a position, or whenever you get paid a dividend. Unless the dividend is a qualified dividend, it’s likely going to be taxed just like short-term gains. And unless you are actively trading in and out of positions (which I don’t usually recommend), you’ll probably be holding stocks long-term and be getting favored tax treatment there in comparison. So, of course, invest in what you believe you should invest…
-
Investing and Taxes: Continued
TL;DR: Follow the steps at the end to change your Schwab account to automatically help you with optimal taxation Last time we talked about short-term vs. long-term capital gains. However, imagine this scenario. You bought 10 shares of AAPL stock in 2014 at a price of $75. You buy another 10 shares in 2018 at $222. It is now trading at around $160, and you decide to sell 10 shares. When it comes to taxation, is this a short-term or long-term gain or loss? The answer is it depends. The default most accounts give you is FIFO (first-in-first-out), which would mean that you are selling the shares you bought in…
-
Investing and Taxes
TL;DR: Use Retirement accounts, and in general take long-term gains and short-term losses. When it comes to taxes, nothing’s ever simple*. However, when I started I wished someone explained this all to me. How your investments are taxed matters a lot! We’re going to start with the very basics and work on more in the following weeks. There are two main ways investments are taxed: Short-term capital gains/losses: For most investments, when you hold your position (say you buy 1 share of AAPL) for less than a year (i.e. you sell that share of AAPL back out), it becomes a short-term capital gain/loss. Whatever you make or lose is taxed at your ordinary income rate. Long-term capital gains/losses: When you hold your…
-
Investing: Cryptocurrency
There’s a lot of intrigue around Bitcoin and it’s siblings. While risky and confusing, it’s a very profitable area to look into investing. Here’s my take on it.