Ask Rande 10,000+
- Kirk
- Rande
- alane4
- Kirk
- Rande
- Rande
- Felipe
- CalWine
- Dirk
- JenL_2
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» Kirk - Re: Re: Re: DCA question
In response to message posted by Rande:. Watch -- some will switch out of QQQ right before they take off and lament being so broadly diversified at just the wrong "time." 
Good point Rande.
My small cap value fund, FLPSX, has been having a banner 3 year run even after having a difficult 1999. Up 70% in 3 years! It cracks me up to hear all the radio and tv experts talk about how you should have some "value" in your portfolio NOW after all they could do was talk about how good the mania stocks were doing in 1999 and early 2000.
<img src=http://pvcharts.quicken.com/bin/icenter.... width=470 height=250>
IF I had a crystal ball, I'd have dumped ALL my money into this fund, but I just had a part of my asset allocation in it. Now it is performing like a champ and, along with the bonds in my portfolio, is allowing my overall portfolio to do better than the S&P500 in these difficult times. Of course, the fund and the bonds were a drag during the hay days when the S&P500 did 20 and 30% a year.
Diversity - it works! Thanks for constantly reminding us all!
Those that chase performance, they will probably chase critical mass too.... never getting there.
-- posted by Kirk
» Rande - Re: Re: Re: Re: DCA question
In response to message posted by Kirk:Kirk,
Good points and charts. Yeah, I harp on the diversification thing (can you imagine having to pay for such nagging? ), but it warrants harping. Being broadly diversified means you will NEVER have the majority of your assets in the "right" place at the "right" time and it means some parts of your portfolio will ALWAYS be "losers." It's hard for some people to learn to live with that reality. But since it's impossible to consistently be in the right place at the right time before the fact, broad diversification allows us to meaningfully participate without the jagged short-term ups and downs a concentrated bet inevitably leads to. If, over time, it comes down to just "being there," then for the vast majority of investors broad diversificaiton within an appropriate asset allocation offers the best hope of being able to "stay the course." The alternative is to be constantly worrying over where to be and when to be there, cultivating an incessantly unsettled and speculative state of mind which inevitably leads to higher costs, higher tax liabilities, and long-term underperformance for the overwhelming majority of those who fall prey.
-- posted by Rande
» alane4 - AMT and stock options
A little off topic..I am confused about the alternate minimum tax in general and specifically how that affects stock options. Let's say I exercise some options, buy them outright rather than a same day sale. The options are valued at $8.00. When I exercise them, the stock is at $20. Pick any number greater than $8 for the value at the end of the tax year. I've heard that the AMT applies on a gain that has not been realized. I mean the stock drop to <$8.00 or less at some time. Do I have this thing right or could someone help me understand it all.
Thanks
Alan
ps some of you might actually remember me from, ahem, a different BB a couple\few years back.
I first logged on to this board using my full name way back when but it doesn't seem to work anymore. But I do lurk here everyday. And have clicked on Kirk's sponsor links a few times :-)
-- posted by alane4
» Kirk - Re: AMT and stock options
In response to message posted by alane4:Welcome to our group!
To get your old, full name working, send email to mailto:dean@suite101.com and he'll get you fixed up.
Thanks for supporting my sponsors too!
-- posted by Kirk
» Rande - Re: AMT and stock options
In response to message posted by alane4:Alan,
With incentive stock options, AMT applies at exercise. In your example, there would be a $12 per share AMT adjustment in the year you exercise your options. To the extent this puts you into an AMT situation you should think of it as a pre-paid tax. If you hold the stock for the required period (at least two years from grant AND one year from exercise), you should get an AMT credit in the year of sale. How does that work? For ordinary purposes, your stock has a basis of $8 but for AMT purposes your stock has a basis of $20. The difference in basis triggers the AMT credit at sale. There are various strategies to minimize the AMT impact and if the dollars are big enough this is an area that warrants the use of a knowledgeable CPA. The following link has some good information, particularly the book "Know Your Options" (you can order the book through Kirk's Reading List):
You should also check out:
-- posted by Rande
» Felipe - 403B plans and Roth IRAs
Rande, I'm sure you've addressed this before, but I used the search engine and couldn't find an answer. So here goes...My wife is changing jobs. Her new employer, a school district, offers a 403B plan (what they call a TSA). This year, I have already contributed to a Roth IRA for both of us (in January). My question is, can she participate in her 403B plan and make contributions to her Roth IRA in the same year?
If it matters, she's 50 years old (don't tell her I told you!) and will be eligible for whatever catch-up contributions are available under either (or both) programs.
I checked the "Tax Guide for Investors" site and didn't find the answer to this question.
-- posted by Felipe
» JenL_2 - Re: 403B plans and Roth IRAs
In response to message posted by Felipe:Felipe - Looks like Rande is taking Labor Day evening off Anyway - let me try to answer your question. Yes your wife can contribute to an IRA regardless of whether she contributes to a 403B plan. There are limitations on income level for contribution to a Roth IRA, but not for a regular IRA. I'm not sure if the new tax rules raised the income level to qualify for contributions to a Roth IRA. Here are a couple of links to help...
from Tax Guide for Investors:
http://www.fairmark.com/rothira/roth101....
from the KPMG site:
http://www.us.kpmg.com/microsite/taxnews...
....Jen
-- posted by JenL_2
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