Investing

Biden’s Capital Gains Tax Increase No Big Deal

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capital gains tax increase

President Biden proposed increasing the capital gains tax and while that makes great headlines, it probably isn’t as big of deal as it sounds like. First off, the higher tax would only apply to those with income above $1 million. That takes out most taxpayers right there. Avoiding Capital Gains Taxes Also, capital gains is one of the easiest to avoid taxes. Most people hope to never lose that much money, but there are plenty of losses to be had even by the best investors. Matching those losses up to gains is called tax-loss harvesting and is frequently used by those with large enough investment portfolios to eliminate some or all of their capital gains taxes. Imagine a scenario where a wealthy investor purchases ABC stock and XYZ stock. A clever investor would make sure that ABC stock and XYZ stock pay an acceptable dividend based on their risk and expected return. So, over a couple of years, our investor collects his dividends. Since the only way this new tax applies is if the investor has $1 million in income, they will pay the highest dividend tax bracket of 20% tax on the dividends, still far lower than the 39% …

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Dividend Stocks Dividend Yield

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dividend stocks dividends investing

If we are going to talk about dividend stocks we need a way to compare dividends. A dividend is an amount paid to shareholders of a company stock as a return of shareholder capital. Dividends are a sign of a healthy company since the only way for a company to pay out cash is to actually have cash. There is no way to hide a cash payment in a company’s account. This cash payment is part of an individual investor’s overall return. What Is Yield? The yield is simply the return provided by an investment. An investment of $1,000 that returns $100 to you provided a yield of $100. Simple right? But, there are some important variables that need to be understood in order to compare yields. Check out this Zelle review. For example, compare two $1,000 investments. One investment returns $100 in one month. The second investment returns $100 in ten years. Obviously, the first investment is far superior to the second investment. Over the same period of time, the first investment would return $12,000 versus just $100, assuming no reinvestment. Any real comparison of dividends requires that we take time into consideration. What Is Dividend Yield? The dividend …

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Stock Buying Opportunities – New on Finance Gourmet

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stock buying opportunities

I’m going to be changing my long-standing policy on Finance Gourmet on not recommending specific investments. Stock buying opportunities require more knowledge than most would-be investors are willing to acquire, but for those willing to learn, there is gold in them thar stock markets. Instead of babying my readers, I’m going to go all out. I think we both can handle it. Investing Recommendations from Finance Gourmet For years, I’ve kept my mouth shut when I see good opportunities for a few reasons. Most people don’t properly understand how and when to invest in individual stocks. — This is still true, but this is my job. I’ll be cranking out investment articles as fast as I can to educate readers how and when buying stocks and other investments is appropriate. (I have sort-of, partially, noted here where I need future investing strategy and knowledge articles to fill in a smart investing opportunity curriculum, but there are many, many more. – I need to get my email list up and running so I can keep you notified when I get them written up. For now, keep checking back.) Until recently the costs associated with buying and selling small amounts of stock …

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Capital Loss Tax Deduction

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capital loss tax deduction schedule d

When you sell certain assets or investments that have appreciated in value, you may owe taxes on the increased value. The difference between what you paid for the investment and the amount you sold the investment is a capital gain and it is subject to capital gains taxes. However, if you lose money on an investment, you can deduct the capital loss. Capital Loss Deduction When it comes to taxes, the more tax deductions the better. And, when you lose money on an investment, a tax deduction can take out a little of the sting. However, deducting capital losses can be tricky. Get the rules straight to save on taxes and avoid making mistakes taking your investment loss tax deduction. Just like with capital gains, there are two kinds of capital losses, short-term capital loss and long-term capital loss. Generally, a long-term capital loss occurs when you have a loss on an investment that you have held for at least one year. Conversely, a short-term capital loss occurs when there is a loss on an investment held for less than a full year. The tax deduction for capital losses is limited to $3,000 per year against your regular income. That …

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Robinhood Becomes Nannyhood

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robinhood becomes a nanny broker

I’m not going to get into the Gamestop thing. There are plenty of other places you can read about it. Finance Gourmet isn’t really about day-trading or riding trends like this. What Finance Gourmet IS about is providing financial information and data to investors. I didn’t even get a chance to finish updating my Robinhood vs Stash vs Acorn post before Robinhood changed its reputation forever. (This is why I chose to just publish the mega post and keep editing it rather than waiting to fill in all the blanks) Robinhood Halts Trades to “Protect” Traders Robinhood today halted BUYS ONLY on several stocks that were being pushed higher by internet-based trading groups. In other words, you are welcome to sell and relieve the price pressure that is hurting hedge funds, but you can’t buy, because Robinhood is protecting you from yourself. Robinhood is the same platform that allowed a trader to rack up millions in debt over dubious trades until he killed himself. It claims to democratize trading by offering trading to the masses, so long as those masses don’t make a mess, apparently. But, this Gamestop thing is making its hedge fund masters uncomfortable, and well… now it …

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Stash vs Acorns vs Robinhood vs Betterment vs Wealthfront

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acorns robinhood stash wealthfront betterment

It is time for a mega-review session where we review Stash versus Acorns versus Robinhood versus Betterment, and Wealthfront. Why these apps? These are current front runners in a crowded space that encourages small investments from regular people as a way to invest rather than the traditional broker models of investing. In a way, this Wealthfront review versus the other money investing apps begs for a new investing apps versus Fidelity, Schwab, ETrade, Ameritrade, ScottTrade review. That will have to wait for another day since I’ve already bitten off more than I can likely chew with an in-depth look at each of the Stash, Acorns, Robinhood, Betterment, Wealthfront apps and financial services. The Quick and Dirty Look (No Fine Print) Is Stash safe? What does Betterment do? Why is Wealthfront better or worse than Acorns? These questions demand an in-depth look at each one, and a thorough review of the fine print. Before that, we can take a look at what each money app and financial service say they do, and how that fits for regular investors. What Is Stash? Stash is why I’m writing this mega-review. People keep asking me about Stash. Then they ask me if Stash is …

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Stocks Rise on Inauguration Day

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new president investing strategy

Stocks are racing higher here on Inauguration Day. The question, as always, for us non-day traders is whether or not the day’s news and the stock market’s reaction to it is worthy of our time and attention. Why Are Is The Stock Market Higher on Inauguration Day Does the stock market just love Joe Biden? Not really. However, the stock market does love two things about today. One, is that there wasn’t any sort of violence or disturbance that would signal danger to the forthcoming economy. The second, is that with control of all three branches, Democrats are likely to enact at least some form of additional stimulus, which will help prop up the economy, and more importantly, stave off the reckoning of a possible recession. Washington Can Finally Help the Fed Prop Up The Economy As the Federal Reserve Chairman has been saying to anyone that will listen, the economy is actually on very weak footing right now. Sure, the stock market has been rising. However, the market’s optimism has largely been fueled by the idea that an America on its knees from the unchecked spread of Covid-19 has nowhere to go but up. Behind the scenes, however, is …

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Wealthfront Review: Safe, Scam, or Legit?

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wealthfront reviews

I keep getting questions about the pros and cons of Wealthfront, probably because they are advertising pretty heavily on Facebook and other platforms. So, it’s time for a Wealthfront review. The most important thing is to make sure Wealthfront is legit. It is SIPC insured (that’s like FDIC insurance for brokerages) so it at least has to be a real financial organization. Of course, that doesn’t mean that Wealthfront has good investment advice or good service advice, but it does mean that if they go under all of the sudden, then Wealthfront is safe insofar as your money is insured. Wealthfront reviews agree that Wealthfront is not a scam. Wealthfront Fees Wealthfront’s trademark is “Self-Driving Money.” It’s value proposition is that it will take care of your money, and manage it for you. Wealthfront is a robo-advisor, and one of the mini-investor platforms. Wealthfront fees are low. The main Wealthfront fee is the advisory fee of 0.25% on the amount deposited with Wealthfront. Of course, like any other wealth app, or brokerage, the investments Wealthfront uses have their own expenses. According to the company, the funds Wealthfront uses charge between 0.06% and 0.13%, which are very low fees for mutual …

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5 Keys to 2021 Stock Market Predictions

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stock market predictions crystal ball

The 2021 stock market predictions will start flowing from the pens of the financial media as the end of 2020 fades into the background. There can be no question that stocks are pricing in a very happy new year. Does that make it a bubble? I think the better question is to understand what is holding up the market. The following tenants are why this market keeps going higher. If any one of them falls apart, then the market gets on shakier ground, and investors will start looking for an exit, whether in a nice, methodical path, or a bubble-bursting flee for the exits based upon how quickly the pillars crumble. What’s Holding Up The Stock Market? 5 Keys to Stock Market Predictions Low Interest Rates – The irony is that the economy is very shaky, and everyone including the Fed knows it, that’s why interest rates are at zero. These low rates are a key to propping up the market. Coronavirus Improvement – Look, the U.S. can’t do any worse with Covid than it did in 2020. Between the federal government just ignoring the whole thing, and the states opening and closing randomly, the U.S. Covid response was about …

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Jeremy Grantham Calls “Epic Bubble”

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stock market bubble

One of my favorite themes here on Finance Gourmet is accountability. Accountability for your financial advisor, accountability for talking heads on money TV, accountability for analysts making “calls” about the market. Too often, all of these predictions and calls are simply forgotten until one of them is “right” and then, they won’t shut up about it. I try, in my huge amounts of spare time (Hah!) to bring a little bit of accountability to the big names and headlines that fly by. Today, it’s Jeremy Grantham. Epic Bubble Every article with the name Jeremy Grantham in it makes sure to “credit” him with predicting the housing bubble of 2007. Some also credit him with predicting the dot-com bubble of 2009. That’s pretty cool, but it is now 2021. Wondering about the TurboTax card? What has he predicted in the last 11 years? Have any of those predictions been good … or bad? Never mind that, the finance press says. He predicted those two things over a decade ago and now he says, “Epic bubble!” Print it! Jeremy Grantham Track Record First off, let’s give Mr. Grantham some credit. In January 2018, he predicted a “melt-up” in the stock market. He …

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