[stansd]

Coop,

I didn’t pencil it out on a spreadsheet…was more for illustrative purposes. That said, I was assuming 25% tax rate vs. 15% cap gains.

Under that scenario, it costs you $6.50 to hold (you pocket $95 if you flip, but $88.50 if you hold and the stock declines 10%). However, you have to add to that $6.50 the opportunity cost of the $95 you would have had in the bank (I’m assuming for 1 year). If this earns 5%, you are up to $10.06 in savings by flipping because of the earned interest of $4.75 less additional taxes of $1.19.

The point holds that you take on a good amount of risk by holding. With Opportunity Cost factored into your scenario, I get a breakeven of $99.44.

Stan

[stansd]

Coop,

I didn’t pencil it out on a spreadsheet…was more for illustrative purposes. That said, I was assuming 25% tax rate vs. 15% cap gains.

Under that scenario, it costs you $6.50 to hold (you pocket $95 if you flip, but $88.50 if you hold and the stock declines 10%). However, you have to add to that $6.50 the opportunity cost of the $95 you would have had in the bank (I’m assuming for 1 year). If this earns 5%, you are up to $10.06 in savings by flipping because of the earned interest of $4.75 less additional taxes of $1.19.

The point holds that you take on a good amount of risk by holding. With Opportunity Cost factored into your scenario, I get a breakeven of $99.44.

Stan

[stansd]

Coop,

I didn’t pencil it out on a spreadsheet…was more for illustrative purposes. That said, I was assuming 25% tax rate vs. 15% cap gains.

Under that scenario, it costs you $6.50 to hold (you pocket $95 if you flip, but $88.50 if you hold and the stock declines 10%). However, you have to add to that $6.50 the opportunity cost of the $95 you would have had in the bank (I’m assuming for 1 year). If this earns 5%, you are up to $10.06 in savings by flipping because of the earned interest of $4.75 less additional taxes of $1.19.

The point holds that you take on a good amount of risk by holding. With Opportunity Cost factored into your scenario, I get a breakeven of $99.44.

Stan

[stansd]

Coop,

I didn’t pencil it out on a spreadsheet…was more for illustrative purposes. That said, I was assuming 25% tax rate vs. 15% cap gains.

Under that scenario, it costs you $6.50 to hold (you pocket $95 if you flip, but $88.50 if you hold and the stock declines 10%). However, you have to add to that $6.50 the opportunity cost of the $95 you would have had in the bank (I’m assuming for 1 year). If this earns 5%, you are up to $10.06 in savings by flipping because of the earned interest of $4.75 less additional taxes of $1.19.

The point holds that you take on a good amount of risk by holding. With Opportunity Cost factored into your scenario, I get a breakeven of $99.44.

Stan

[stansd]

Coop,

I didn’t pencil it out on a spreadsheet…was more for illustrative purposes. That said, I was assuming 25% tax rate vs. 15% cap gains.

Under that scenario, it costs you $6.50 to hold (you pocket $95 if you flip, but $88.50 if you hold and the stock declines 10%). However, you have to add to that $6.50 the opportunity cost of the $95 you would have had in the bank (I’m assuming for 1 year). If this earns 5%, you are up to $10.06 in savings by flipping because of the earned interest of $4.75 less additional taxes of $1.19.

The point holds that you take on a good amount of risk by holding. With Opportunity Cost factored into your scenario, I get a breakeven of $99.44.

Stan

[stansd]

I’ve done a good amount of thinking on this. I think the best strategy in general is to do a rolling flip…accumulate a years worth and then flip immediately once it hits the capital gains window. Upside is the certainty of lower taxes and the potential for gain from stock increases. Downside is that you are further exposed to the risk of the company you work for.

That’s the ideal: In my situation, I’ve also had a fair amount of exposure to my company’s performance via bonuses or options. Because of this, I’ve been flipping it immediately.

It’s all about your risk tolerance. The highest expected value will come from holding it a year, but you have to weigh that against your tolerance and the other risk exposure you have to the company.

One other thought: if you pay $80 for $100 worth of stock, 10% decline wipes out $10 of wealth. Your tax savings are someing like 10% *$20 = $2. $2 isn’t insignificant, but you take on a good amount of risk to save it.

Stan

[stansd]

I’ve done a good amount of thinking on this. I think the best strategy in general is to do a rolling flip…accumulate a years worth and then flip immediately once it hits the capital gains window. Upside is the certainty of lower taxes and the potential for gain from stock increases. Downside is that you are further exposed to the risk of the company you work for.

That’s the ideal: In my situation, I’ve also had a fair amount of exposure to my company’s performance via bonuses or options. Because of this, I’ve been flipping it immediately.

It’s all about your risk tolerance. The highest expected value will come from holding it a year, but you have to weigh that against your tolerance and the other risk exposure you have to the company.

One other thought: if you pay $80 for $100 worth of stock, 10% decline wipes out $10 of wealth. Your tax savings are someing like 10% *$20 = $2. $2 isn’t insignificant, but you take on a good amount of risk to save it.

Stan

[stansd]

I’ve done a good amount of thinking on this. I think the best strategy in general is to do a rolling flip…accumulate a years worth and then flip immediately once it hits the capital gains window. Upside is the certainty of lower taxes and the potential for gain from stock increases. Downside is that you are further exposed to the risk of the company you work for.

That’s the ideal: In my situation, I’ve also had a fair amount of exposure to my company’s performance via bonuses or options. Because of this, I’ve been flipping it immediately.

It’s all about your risk tolerance. The highest expected value will come from holding it a year, but you have to weigh that against your tolerance and the other risk exposure you have to the company.

One other thought: if you pay $80 for $100 worth of stock, 10% decline wipes out $10 of wealth. Your tax savings are someing like 10% *$20 = $2. $2 isn’t insignificant, but you take on a good amount of risk to save it.

Stan

[stansd]

I’ve done a good amount of thinking on this. I think the best strategy in general is to do a rolling flip…accumulate a years worth and then flip immediately once it hits the capital gains window. Upside is the certainty of lower taxes and the potential for gain from stock increases. Downside is that you are further exposed to the risk of the company you work for.

That’s the ideal: In my situation, I’ve also had a fair amount of exposure to my company’s performance via bonuses or options. Because of this, I’ve been flipping it immediately.

It’s all about your risk tolerance. The highest expected value will come from holding it a year, but you have to weigh that against your tolerance and the other risk exposure you have to the company.

One other thought: if you pay $80 for $100 worth of stock, 10% decline wipes out $10 of wealth. Your tax savings are someing like 10% *$20 = $2. $2 isn’t insignificant, but you take on a good amount of risk to save it.

Stan

[stansd]

I’ve done a good amount of thinking on this. I think the best strategy in general is to do a rolling flip…accumulate a years worth and then flip immediately once it hits the capital gains window. Upside is the certainty of lower taxes and the potential for gain from stock increases. Downside is that you are further exposed to the risk of the company you work for.

That’s the ideal: In my situation, I’ve also had a fair amount of exposure to my company’s performance via bonuses or options. Because of this, I’ve been flipping it immediately.

It’s all about your risk tolerance. The highest expected value will come from holding it a year, but you have to weigh that against your tolerance and the other risk exposure you have to the company.

One other thought: if you pay $80 for $100 worth of stock, 10% decline wipes out $10 of wealth. Your tax savings are someing like 10% *$20 = $2. $2 isn’t insignificant, but you take on a good amount of risk to save it.

Stan

[stansd]

That doesn’t strike me as a conservative portfolio. Depending on how soon you think you may need the money, 40% equity may be aggressive. The mix of the bond fund is also important as well. If it’s longer term maturities (look at the duration of the fund-if it’s more than a couple years, it’s fairly risky for someone that may need the dough soon), or a fund that invests in anything except T-bills, you may have risk there.

The currency fund may not be a terrible idea if it’s a bet against the dollar (the assumption being if the dollar does well, your other funds will do well also, but if the dollar does poorly, your equities are likely to do poorly so you are a bit more hedged). That said, I have trouble seeing a conservative portfolio that includes a currency fund.

Is your advisor earning any fees on these funds (look for the front or back end load and the expense ratio)? If any of those are more than 1%, you’ve been taken for a ride in my mind.

Hard to say without more info, but the early indicators aren’t good to me that you have been given good advice.

Stan

[stansd]

That doesn’t strike me as a conservative portfolio. Depending on how soon you think you may need the money, 40% equity may be aggressive. The mix of the bond fund is also important as well. If it’s longer term maturities (look at the duration of the fund-if it’s more than a couple years, it’s fairly risky for someone that may need the dough soon), or a fund that invests in anything except T-bills, you may have risk there.

The currency fund may not be a terrible idea if it’s a bet against the dollar (the assumption being if the dollar does well, your other funds will do well also, but if the dollar does poorly, your equities are likely to do poorly so you are a bit more hedged). That said, I have trouble seeing a conservative portfolio that includes a currency fund.

Is your advisor earning any fees on these funds (look for the front or back end load and the expense ratio)? If any of those are more than 1%, you’ve been taken for a ride in my mind.

Hard to say without more info, but the early indicators aren’t good to me that you have been given good advice.

Stan

[stansd]

That doesn’t strike me as a conservative portfolio. Depending on how soon you think you may need the money, 40% equity may be aggressive. The mix of the bond fund is also important as well. If it’s longer term maturities (look at the duration of the fund-if it’s more than a couple years, it’s fairly risky for someone that may need the dough soon), or a fund that invests in anything except T-bills, you may have risk there.

The currency fund may not be a terrible idea if it’s a bet against the dollar (the assumption being if the dollar does well, your other funds will do well also, but if the dollar does poorly, your equities are likely to do poorly so you are a bit more hedged). That said, I have trouble seeing a conservative portfolio that includes a currency fund.

Is your advisor earning any fees on these funds (look for the front or back end load and the expense ratio)? If any of those are more than 1%, you’ve been taken for a ride in my mind.

Hard to say without more info, but the early indicators aren’t good to me that you have been given good advice.

Stan

[stansd]

That doesn’t strike me as a conservative portfolio. Depending on how soon you think you may need the money, 40% equity may be aggressive. The mix of the bond fund is also important as well. If it’s longer term maturities (look at the duration of the fund-if it’s more than a couple years, it’s fairly risky for someone that may need the dough soon), or a fund that invests in anything except T-bills, you may have risk there.

The currency fund may not be a terrible idea if it’s a bet against the dollar (the assumption being if the dollar does well, your other funds will do well also, but if the dollar does poorly, your equities are likely to do poorly so you are a bit more hedged). That said, I have trouble seeing a conservative portfolio that includes a currency fund.

Is your advisor earning any fees on these funds (look for the front or back end load and the expense ratio)? If any of those are more than 1%, you’ve been taken for a ride in my mind.

Hard to say without more info, but the early indicators aren’t good to me that you have been given good advice.

Stan

[stansd]

That doesn’t strike me as a conservative portfolio. Depending on how soon you think you may need the money, 40% equity may be aggressive. The mix of the bond fund is also important as well. If it’s longer term maturities (look at the duration of the fund-if it’s more than a couple years, it’s fairly risky for someone that may need the dough soon), or a fund that invests in anything except T-bills, you may have risk there.

The currency fund may not be a terrible idea if it’s a bet against the dollar (the assumption being if the dollar does well, your other funds will do well also, but if the dollar does poorly, your equities are likely to do poorly so you are a bit more hedged). That said, I have trouble seeing a conservative portfolio that includes a currency fund.

Is your advisor earning any fees on these funds (look for the front or back end load and the expense ratio)? If any of those are more than 1%, you’ve been taken for a ride in my mind.

Hard to say without more info, but the early indicators aren’t good to me that you have been given good advice.

Stan

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