Two Plus Two Newer Archives  

Go Back   Two Plus Two Newer Archives > Other Topics > Business, Finance, and Investing

Reply
 
Thread Tools Display Modes
  #31  
Old 09-08-2007, 05:06 PM
KellyRae KellyRae is offline
Member
 
Join Date: Mar 2005
Posts: 77
Default Re: Best Index Investment Strategy?

Thanks for this information. Is it correct that as long as you keep the money in the funds you have invested in you will not incur any taxes until you sell the interest in the funds? Or do you receive annual payments for dividends or the like on these funds (I am guessing they just stay in the fund, so no taxes are incurred but not sure).

Also with respect to the bond funds - if holding in the fund avoids taxes until you liquidate (unless, again, there are payouts in the form of dividends or interest), would a long term investor ever really be better off in tax-exempts as is suggested later in this thread?

Thanks in advance for any thoughts on this.
Reply With Quote
  #32  
Old 09-09-2007, 05:14 PM
Isura Isura is offline
Senior Member
 
Join Date: Aug 2004
Posts: 13,926
Default Re: Best Index Investment Strategy?

[ QUOTE ]

Thanks for this information. Is it correct that as long as you keep the money in the funds you have invested in you will not incur any taxes until you sell the interest in the funds? Or do you receive annual payments for dividends or the like on these funds (I am guessing they just stay in the fund, so no taxes are incurred but not sure).

[/ QUOTE ]

I would double check with the particular fund you're interested in. In Canada, we have a registered retirement account that is not taxed until you withdraw from the fund.
Reply With Quote
  #33  
Old 09-09-2007, 05:16 PM
Isura Isura is offline
Senior Member
 
Join Date: Aug 2004
Posts: 13,926
Default Re: Best Index Investment Strategy?

jively,

I was reading articles at http://www.efficientmarket.ca/ which suggested allocating index funds based on market capitalization. So US would only be allocated 40% instead of 70% in your plan. What is your reasoning for investing so heavily in the US? Would you recommend differently for a Canadian investor?
Reply With Quote
  #34  
Old 09-09-2007, 05:54 PM
Jason Strasser (strassa2) Jason Strasser (strassa2) is offline
Senior Member
 
Join Date: Nov 2003
Location: durham
Posts: 4,912
Default Re: Best Index Investment Strategy?

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Giving up a lot of EV being so diversified and passive. Great for Joe Sixpack but the readers here should understand risk. With the new leveraged ETF's, readers here could easily beat that portfolio with same risk and minimal time invested.

[/ QUOTE ]
There is no such thing as a free lunch. It is possible to create portfolios with higher EV but at a cost of higher risk. I'd be willing to discuss your portfolio recommendation, but I'd prefer to do it in another thread. This is a thread on index investment strategy. Why don't you start a new thread on leveraged ETF allocations.

-Tom

[/ QUOTE ]
Arbitrage is a prime example of a free lunch.

My point was if readers here can beat 400nl they can managed risk. So it be stupid for same person to be so diversified. They could invest in 3-4 ETFs and use a longterm risk model(p/e 200Ma)and the returns will be higher with comparable risk then your cookie cutter portfolio. You portfolio has too many positions and is losing EV somewhere.

I was talking about the new ProShares 2x leveraged ETF,s. Not sure why you think these were not ETFs or would not apply to a ETF index investment strategy. You could even use your allocations but replace small caps with ultra Russell 2000 ETF. Reduce the size by half and move the difference into fixed income. Boom less risk for the same return. AKA on your way to a free lunch.
http://www.proshares.com/ [img]/images/graemlins/grin.gif[/img]

[/ QUOTE ]

dangerous attitude
Reply With Quote
  #35  
Old 09-10-2007, 08:46 PM
gusmahler gusmahler is offline
Senior Member
 
Join Date: Jul 2005
Location: Northern California
Posts: 4,799
Default Re: Best Index Investment Strategy?

[ QUOTE ]
My point was if readers here can beat 400nl they can managed risk.

[/ QUOTE ]
The problem with that attitude is that it assumes that the reader (whether they are a successful poker player or a successful doctor/lawyer/etc.) has the time/inclination/desire to deal with investments. Some do, and could easily follow riskier advice. But many don't (just because you're a financially successful poker player or surgeon, doesn't mean you know anything about the stock market). That is where the Jively's strategy fits in.
Reply With Quote
  #36  
Old 09-11-2007, 10:52 AM
Dustin D Dustin D is offline
Senior Member
 
Join Date: Sep 2006
Posts: 100
Default Re: Best Index Investment Strategy?

Thanks for all the advice jively. If you get a chance to respond to my pm you can post it here or by pm.
Reply With Quote
  #37  
Old 09-11-2007, 10:57 AM
xxThe_Lebowskixx xxThe_Lebowskixx is offline
Senior Member
 
Join Date: Aug 2006
Location: Indeed.
Posts: 3,784
Default Re: Best Index Investment Strategy?

if you don't mind variance, why not just go for emerging market etfs? why even invest in the us markets?
Reply With Quote
  #38  
Old 09-11-2007, 02:07 PM
jively jively is offline
Senior Member
 
Join Date: Apr 2005
Location: Long Island, NY
Posts: 782
Default Re: Best Index Investment Strategy?

[ QUOTE ]
Thanks for this information. Is it correct that as long as you keep the money in the funds you have invested in you will not incur any taxes until you sell the interest in the funds? Or do you receive annual payments for dividends or the like on these funds (I am guessing they just stay in the fund, so no taxes are incurred but not sure).

Also with respect to the bond funds - if holding in the fund avoids taxes until you liquidate (unless, again, there are payouts in the form of dividends or interest), would a long term investor ever really be better off in tax-exempts as is suggested later in this thread?

[/ QUOTE ]
If you are holding a mutual fund in a non-retirement (taxable) account, you do not have to pay tax based on the appreciation of the fund until you sell it. However, the funds distribute their interest, dividends, and their capital gains to their investors every year. For stock funds, much of this (dividends and long-term capital gains) will be at a lower tax rate. For bond funds and REITs, most of the income will be at your ordinary tax rate.

For high tax bracket investors, you should consider muni bond funds instead of taxable bond funds. When bond funds are sold, there may be a small capital gain or capital loss, even if you use a muni bond fund. (If you use short- and intermediate-term funds that have high quality bonds, this gain or loss should be pretty small.) However, as I said, most of the income is interest income that is taxed each year at your marginal rate.

-Tom
Reply With Quote
  #39  
Old 09-11-2007, 02:16 PM
jively jively is offline
Senior Member
 
Join Date: Apr 2005
Location: Long Island, NY
Posts: 782
Default Re: Best Index Investment Strategy?

[ QUOTE ]
I was reading articles at http://www.efficientmarket.ca/ which suggested allocating index funds based on market capitalization. So US would only be allocated 40% instead of 70% in your plan. What is your reasoning for investing so heavily in the US? Would you recommend differently for a Canadian investor?

[/ QUOTE ]
It is more diversified to have a country weighting similar to the size of the country. So, US investors should maybe only have about 40% of the stock portion in the US and the rest international.

However, there is a kind of "tracking" error associated with diversifying so much out of your home country. Most of the news, and most of your friends will have most of their investments in their home country. If your country is having an outstanding year, and your globally diversified portfolio isn't doing as well, investors without extreme discipline may be tempted to tinker with their allocations. Tinkering at that time is probably a mistake. It is better to pick an allocation and stick with it year in and year out. I think 70% to US for US investors is just fine. In general, I think most investors overweight their home country to some extent.

I think Canada's stock market is only 2-3% of the world in market cap. 40% to US is just fine for a Canadian investor. Besides being right next to us geographically, there's no reason to overweight the US. (What % allocation do they recommend to Canadian stocks?)

-Tom
Reply With Quote
  #40  
Old 11-08-2007, 03:20 PM
jively jively is offline
Senior Member
 
Join Date: Apr 2005
Location: Long Island, NY
Posts: 782
Default Re: Best Index Investment Strategy?

I'm bumping this thread, stickied in the FAQ, so that it survives the forum upgrade.

-Tom
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -4. The time now is 06:53 AM.


Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.