IRA holdings

[villainx]

For folks who invest via there IRAs, are there particular characteristics or types of stocks that is better or worse?  Do folks avoid foreign companies/stocks because of taxes that can't be reimbursed?  I believe REITs and MLPs are avoided because of the taxes?  Is there more emphasis on appreciation or dividends for either traditional or ROTH?

 

I haven't focused much on optimizing my investments between regular brokerage or IRA accounts, but I'm thinking I should be more mindful going forward.

[villainx]

Or a good book or website/blog that discusses optimizing IRAs would be appreciated too.

[racemize]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

[villainx]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

This makes a lot of sense to me and I've been trying to switch my thought process.  I was originally of the IRA = nest egg camp, but now I have stuff in my taxable that I want to sell but am waiting on because of the tax implications.  Plus, now it's getting to a point where a have to worry about dividends too.  And the IRA has a lot of things that I don't consider selling at all, like most of my BRK. 

[Mephistopheles]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

This makes a lot of sense to me and I've been trying to switch my thought process.  I was originally of the IRA = nest egg camp, but now I have stuff in my taxable that I want to sell but am waiting on because of the tax implications.  Plus, now it's getting to a point where a have to worry about dividends too.  And the IRA has a lot of things that I don't consider selling at all, like most of my BRK. 

 

BRK is exactly the type of stock that should be held in a taxable account. My parents taxable account has both BRK and MKL as long term holdings which over the years have accumulated massive deferred taxes in the form of unrealized gains, and I plan on keeping it that way forever. When they pass on, my sister and I will get the shares at a stepped up cost basis and hopefully we too will hold forever. I love keeping that money away from Uncle Sam.

[TwoCitiesCapital]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

I have the opposite approach. Lol.

 

My IRA is typically for the positions that I intend to hold long-term and I favor dividend paying stocks so I can avoid the income tax on them. I do all my risky investing in my taxable account where Uncle Sam subsidizes my losses.

 

That being said, after the last unfavorable court-ruling in FNMA/FHLMC case, I liquidated all of my holdings of FNMA common and preferred in my taxable account to book the loss and then repurchased the entire position in FHLMC preferreds in my Roth IRA. Would be nice to never pay taxes on that if it turns out in my favor and much and a good bit of the loss has already been subsidized.

[racemize]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

I have the opposite approach. Lol.

 

My IRA is typically for the positions that I intend to hold long-term and I favor dividend paying stocks so I can avoid the income tax on them. I do all my risky investing in my taxable account where Uncle Sam subsidizes my losses.

 

That being said, after the last unfavorable court-ruling in FNMA/FHLMC case, I liquidated all of my holdings of FNMA common and preferred in my taxable account to book the loss and then repurchased the entire position in FHLMC preferreds in my Roth IRA. Would be nice to never pay taxes on that if it turns out in my favor and much and a good bit of the loss has already been subsidized.

 

Yeah, Al said something similar, so he could write off losses.  I still find this confusing though, as your expected return is positive in investing (or you shouldn't be doing it), so overall I would expect more gains than losses, which means the loss of losses shouldn't offset the gain of non-taxation of gains.  In other words, I still don't get it.

[hillfronter83]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

I have the opposite approach. Lol.

 

My IRA is typically for the positions that I intend to hold long-term and I favor dividend paying stocks so I can avoid the income tax on them. I do all my risky investing in my taxable account where Uncle Sam subsidizes my losses.

 

That being said, after the last unfavorable court-ruling in FNMA/FHLMC case, I liquidated all of my holdings of FNMA common and preferred in my taxable account to book the loss and then repurchased the entire position in FHLMC preferreds in my Roth IRA. Would be nice to never pay taxes on that if it turns out in my favor and much and a good bit of the loss has already been subsidized.

 

You have to be care with such strategy. If I remember correctly, this is subject to wash sale rule.

[TwoCitiesCapital]

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

I have the opposite approach. Lol.

 

My IRA is typically for the positions that I intend to hold long-term and I favor dividend paying stocks so I can avoid the income tax on them. I do all my risky investing in my taxable account where Uncle Sam subsidizes my losses.

 

That being said, after the last unfavorable court-ruling in FNMA/FHLMC case, I liquidated all of my holdings of FNMA common and preferred in my taxable account to book the loss and then repurchased the entire position in FHLMC preferreds in my Roth IRA. Would be nice to never pay taxes on that if it turns out in my favor and much and a good bit of the loss has already been subsidized.

 

Yeah, Al said something similar, so he could write off losses.  I still find this confusing though, as your expected return is positive in investing (or you shouldn't be doing it), so overall I would expect more gains than losses, which means the loss of losses shouldn't offset the gain of non-taxation of gains.  In other words, I still don't get it.

 

While I don't disagree with you, this is my way of hedging. I've been wrong before, in my IRAs, and losing tens of thousands of dollars that could've compounded tax free or tax deferred and NOT getting the tax write-off was painful. I prefer to hedge that I may not be as good as I would hope to be even and take the tax-related benefits now as opposed to later.

 

I use my IRA for aggressive purchasing, e.g., shorter time horizons (no short term tax issues) and/or leverage (e.g., this is where I do most options purchasing).  To me, it makes sense to put all the longer term investments in taxable accounts and anything with <1 year (if you have those), but even extending to 2-5 years, in IRA.

 

On the other hand, I know some people view IRAs as their nest egg, so they put all the safer investments there.  That doesn't make too much sense to me personally, as I view the two sets of money as the same/grouped and am only optimizing for tax consequences.

 

I have the opposite approach. Lol.

 

My IRA is typically for the positions that I intend to hold long-term and I favor dividend paying stocks so I can avoid the income tax on them. I do all my risky investing in my taxable account where Uncle Sam subsidizes my losses.

 

That being said, after the last unfavorable court-ruling in FNMA/FHLMC case, I liquidated all of my holdings of FNMA common and preferred in my taxable account to book the loss and then repurchased the entire position in FHLMC preferreds in my Roth IRA. Would be nice to never pay taxes on that if it turns out in my favor and much and a good bit of the loss has already been subsidized.

 

You have to be care with such strategy. If I remember correctly, this is subject to wash sale rule.

 

Only for substantially similar securities. Would be hard to argue that the common/preferred shares of one company are substantially similar to the the preferred shares of another - even if they're subject to similar fate. And if they are substantially similar securities, why was one trading at a 20% discount to the other relative to the face value?

 

I'm pretty comfortable the switch would hold up under scrutiny.

[oddballstocks]

IRA for:

 

-Short term value realization

-Potential trades

-PFIC companies

-High dividend payers

-Companies in liquidation

-Special situations

 

Taxable:

-Value to be realized past one year

-Foreign stocks

-Risky trades

-Options