/biz/ - Business & Finance

>>990135
>Why would this ever be income?
If the sale of the real estate is considered to be a commercial undertaking, then it can be classified as income. More specifically stated, if the house or property was held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, then its not a capital asset.

Say you buy a house with the intent to fix it up and sell it in the future. You spend some time and money making improvements. Maybe you make a little side money listing the property on AirBNB while waiting for a buyer. Then you actively market and sell the house at a profit. Under these facts, there's a decent chance the IRS would consider you a "dealer" and classify the proceeds as income.

The test for whether such a sale is income or capital gains depends on a number of factors, such as the time you owned the property, any business or rental use of the property, if you've done these types of transactions in the past, the type of improvements or changes you made to the property, and the extent of your involvement in the process.

Every case is fact specific, and I don't know enough to form an opinion in OP's situation. But the question is relevant nonetheless.

>>990121
Actually they're most commonly used to avoid probate, but thanks for telling me that I'm right.

Grantor trusts, such as revocable living trusts, are disregarded entities for tax purposes. The trust does not file a separate tax return, and any taxable events are attributed to the grantor.

However, I don't see how the sale of a house in this situation would be considered income, unless the grantor is in the business of selling houses. AFAIK, a sale of real estate generates capital gains (or losses), not income. So the grantor would have to report the gain (or loss).

>>988262
>did you specifically allocate those proportions according to some research or is that just what you were comfortable with?
The allocations reflect my risk tolerances, investing horizon, and tax needs. They aren't based on any particular research or study.

>if you believe small cap out-performance will persist, why do you have such a small allocation to small caps?
Fair question.

First, understand that in the US, small caps are only about 9-10% of the total market. So even at 15% I'm already modestly over-weighting.

Second, I've only become convinced of the merits of strategic over-weighting this year, and I'm still deciding if and how to fold this into my overall strategy. Small caps are more volatile, and therefore strategic over-weighting is more suited to investors with the longest time horizons (i.e., young investors in their 20's and 30's). By comparison, I'm older, wealthier, and more risk averse than the average 20-30 year old. So even though I believe in overweighting small caps, that doesn't by itself answer the question how to adapt that to my situation.

I suspect I'll build to about 20%, slowly (see below), because that seems right for me.

>How often do you re-balance?
I don't do traditional rebalancing because the tax hits would be too great. I have substantial unrealized capital gains in almost all my funds, and because I'm in the highest tax bracket for gains taxes, moving allocations around is too costly to justify under normal circumstances. Something as small as a 5% shift in my holdings means a $600,000 transaction and possibly as much as $40,000-$60,000 in taxes.

(Its for the same reason that I'm stuck with 40 funds and can't simplify my holdings as I'd like. It'd just be too costly).

Instead, I try to keep my allocations in line with new money from other sources or investments. Because I own so many different funds, its easy to buy whatever specific allocation sector needs to be boosted. I've made it work so far.

>>987522
>cant touch it until after age 59 1/2 or penalty
Wrong
>shit tier interest rate
Huh?
>still have to pay taxes on it
Only when you withdraw it as income.
>many people lose their 401k if they switch jobs or the company goes under/files bankruptcy
Wrong
>all retirement plans are shit, life reinsurance is the best way to grow your money
Wrong

Congrats: you're the third-dumbest poster in this thread.

>>987196
>So how much of that money was given to you by mommy and daddy?
I did inherit a small sum, about 2% of my net worth. That, and my parents did pay my education costs, for which I am quite grateful. So yes, I had strong financial support from my family. But no, that's not where my money came from.

I never claimed to be a rags-to-riches story. If that's the role model you're looking for, look elsewhere.

>>987369
>What does your portfolio look like? Just VTASX and whatever the bond vanguard ticker is, or...?
85/15 stock/bonds. 60/25/15 large/mid/small. 80/20 domestic/international. 65/35 index/active.

As for my actual holdings, my portfolio was constructed over many years and I didn't have a clear design at the outset. As such, I have separate small, mid and large cap funds, separate value and growth funds, and separate international funds. Add to that my actively managed funds, and my tax-managed funds. Then add my some one-off stocks, ETFs, and MLPs. All together, its about 40 separate holdings.

I don't really recommend that people build a portfolio the way I did. It's a lot to manage, and I wish I could cut it down to 20 or so funds. But at the end of the day, its really more about your allocations and your fees than which exact funds you own.

>>987147
>whoever said a graphic design degree wasn't worth it
Aww, you caught me. Well, it was a good run.

Yes, once I realized my law degree was so useless, I immediately enrolled for classes in the high-paying field of graphic design. Here's another example of my elite photoshop skilzz.

>>987126
>irony
I don't that word means what you think.

>>987114
>screenshots
kek.

I think the research into equal-weighted indexing is extremely interesting, and I'm keeping a close eye on its development. I think its somewhat unlikely that continued rigorous academic scrutiny will bear this out, but I've got an open mind.

You have to remember that researchers and analysts are constantly evaluating new investing strategies. The beauty of the computer-age is the ability to easily backtest any arbitrary set of trading rules. As a consequence, every year we hear of some new approach, be it revolutionary or simply a tweak to an old idea. And they all come with some evidence that they outperform the S&P or other relevant index.

The problem is that further testing tends to disprove the value of almost all of these new portfolios. In the best case, they offer no meaningful improvements over simple index investing, and in the worst case, they significantly underperform.

Only a fool would change their investment strategy based on a strategy not yet exposed to strict academic review and testing. Those who do will find their assets stuck in things like the Permanent Portfolio, the Dogs of the Dow, the Coffeehouse Portfolio, the Margaritaville, the No Brainer Portfolio ... etc., etc., etc., all of which were or are popular "improvements" to index investing. And all of which have underwhelmed and underperformed.

Indeed, to my mind, the only tweak that has stood up to serious academic query is the recommendation to strategically overweight into small-cap value stocks in a long-term portfolio.

So, is equal-weighted index investing just another meme investing tweak? Probably, but I don't know yet. There's certainly not enough evidence for any serious investor to divert otherwise productive capital into that approach.

What's puzzling is why you keep shilling this whitepaper as if you, yourself, discovered the holy grail? You're obviously not smart enough to be a serious or credible advocate for the theory. So why make such an ass of yourself?

>>985277
>looking to get a 170+ (not unreasonable given my usually standardized test track record)
Your post made me curious about my own score, which I hadn't thought about in a long time. The scale was different back then, but 98th percentile was good enough to get into four T14 law schools (fuck you Harvard & Yale). If you get that 170+ you should be in great shape. Good luck.

>>985277
>I'm taking the lsat tomorrow
Good luck man. Thinking back to my LSAT makes me feel old ... that was a long time ago. I hope everything goes well.

>>985302
>Really all that needs to happen on 4chan is to be introduced to ideas that you might not have been before (not like I hadn't heard of this stuff but was more keen to look into it after).
Bingo. I never ask people to take my advice at face value, or to blindly copy what I do. I try to point out good ideas (and explain WHY they're good ideas), and yeah, I make fun of bad ideas.

But at the end of the day, you have to make your own decisions.

>>984959
>not so true for systematic hedge funds constantly applying their models and taking short term positions in multiple markets
The infographic I posted above (>>984825) specifically looks at hedge fund returns, and reaches the same conclusion as every other academic analysis of active trading: it's a losing strategy. Again, I don't care if you can cite me a couple examples of funds that performed well for some period of time because (a) you didn't and couldn't know that particular fund versus all the others was the fund that would outperform, and (b) let's see how many of these winning funds can repeat that performance over five years, and then five more years, etc.

Every person on this board has a 30-50 year investing horizon. Picking a strategy that simply does not work in the long term is just shortsighted and stupid.

>>984991
>According to the BLS you're down 1.46% in real terms.
Let get this straight: I tell you that my fund balances have grown 20.32% every year for 10 years ... and you somehow think that inflation has eroded all that growth? Are you actually brain damaged?

Why would you put on a trip when your financial knowledge is so obviously rudimentary? Common convention is to use a trip only when you have specialized knowledge or experience relevant to their board and the topic at hand. Otherwise, you're just being an attention whore.

>>984994
Congrats. Keep it up and stay the course.

>>985028
You really have no idea how Wall Street works, huh?

>>985035
>names four "superstar" investors that he claims beat the markets with trading
>two of them don't trade and actually recommend index investing
>that leaves 2 "winners" out of the millions of people who try to beat the markets
You really have no idea how statistics work, huh?

>>984853
>I don't lie about my returns iHaz
I don't know who you are, I've never seen you make any claims about your returns, and I don't know why you think I singled you out. I gather from your post that you count yourself as a trader of some sort. I'm sorry to hear that, but I suspect you'll learn better within a year or two.

>For high earners with limited time like yourself its by far the best way to invest.
This is another stupid meme trotted out by the active trading crowd. The implication is that small traders or traders with enough time or energy can beat the markets. However, the evidence proves otherwise.

The fact remains that there is NO evidence that putting in time, effort, or hours (all quantifiable inputs) results in any improvement in investment returns (also quantifiable). Its not like its hard to test this, and it has been tested over and over. I've given at least five citations in this thread alone. Instead, the active traders give us lies, fabrications, and anecdotes.

>Warren buffett exists.
1. Warren Buffett is no more an active trader than you or me. His company, Berkshire Hathaway (in which I am an investor) specializes in strategic and value-oriented M&A transactions. If you took the time to actually read the 10K or 10Q's from the company (freely available) you'd see that investing activity makes up only a de minimus portion of BRK's income.

2. Even if Warren Buffett were a successful active trader, or even if you cite some other example, all it proves is that statistical outliers exist. Which is as expected mathematically, and which I ALREADY stated above (>>984825).

(If you want to keep this discussion on a civil level, I do ask that you at least give the courtesy of reading what I write.)

>>984843
>If you're only making 8% returns I feel bad for you son.
Coincidentally, I just today calculated my fund returns in response to a question from another anon. In case you're curious, my 10 year CAGR is 20.32%.

>>984830
>With capital under 1m you can make 100-200% annually, year after year.
This is some shitty meme pushed by active traders who have no academic or scientific evidence to counter the towers of studies proving that trading is a failed strategy.

If its so "easy" (as you claim) to beat the markets (by 100-200%, lol) with small amounts of capital, then we would expect to find that ALL professional money managers would beat the markets by at least a small margin, since they can all elect where and how to deploy their capital. And yet all professional money managers do not beat the markets, regardless of how much capital they invest.

If you have some credible research to back up your claims, bring it. If you have some academic support for your allegations, cite it. But don't sling around dank bullshit, hyperbolic fabrications, and third-hand anecdotes and expect anyone to believe you.

http://www.cbsnews.com/news/s-p-spiva-midyear-2014-active-versus-passive-scorecard-active-underperforms-again/

http://www.zerohedge.com/news/2013-04-29/wall-street-rentier-rip-index-funds-beat-996-managers-over-ten-years

https://www.youtube.com/watch?v=SwkjqGd8NC4

https://www.youtube.com/watch?v=zqa-jSuXmYw

>>984338
>It doesn't make sense that most people with non-finance day jobs would beat the market, they would be beating people who watch stock prices 12 hours a day.
Most people WITH finance day jobs don't beat the market. 98% of professional money managers can't beat a simple Vanguard index over five years, once you deduct their fees. We're talking about people with MBAs from Ivy League schools, nearly infinite resources and research, teams of analysts, and as much capital as they choose to deploy.

There is simply NO evidence that intelligence, skill, education, experience, time, research, resources, or effort has ANY effect on your performance in the markets.

So what accounts for the "superstar" managers or people with gaudy returns? Luck, luck, and a bit more luck. That's just how statistics work: the existence of a lucky outlier doesn't mean that 98% don't fail.

https://www.dimensional.com/famafrench/essays/luck-versus-skill-in-mutual-fund-performance.aspx

So don't listen to bloggers or media types who have a financial interest in getting you to trade the way that makes them money. Don't listen to the Chinese daytraders who lie about their returns and try to make themselves feel better about their failures by getting you to make the same mistakes.

Invest the way that makes YOU money: low-cost long-term highly-diversified buy-and-hold.

>>984248
>You've put more money in over time (referring to that graph of your balance), right?
Yes, which is why simple CAGR isn't the best measurement. I tend to rely on IRR when judging my fund performance because it accounts for inflows.

>whats your CAGR?
Here's my full performance numbers.

IRR
1 year: 0.1%
3 year: 10.7%
5 year: 9.5%
10 year: 7.1%

CAGR (simple)
1 year: 22.38%
3 year: 21.97%
5 year: 17.96%
10 year: 20.32%

CAGR (net) (deducting inflows)
1 year: -1.06%
3 year: 11.24%
5 year: 10.39%
10 year 12.06%

IRR remains the best measurement, though it confuses people who compare it to reported fund performance numbers or index returns and don;t understand why its inherently lower. CAGR is overstated because I have significant periodic and one-time inflows. CAGR (net) is an informative but imprecise measurement because it doesn't account for the timing of inflows.

All three are understated because I treat reinvested interest, dividends, and capital gains distributions as new purchases. Most people would add these to their return figures, but my tracking software follows the GAAP convention of treating them as inflows. So if you want to do an apple-to-apples comparison to returns with dividends included, add about 2% across the board.

Lastly, I should point out these numbers (and the chart above) are ONLY for my funds and ETFs, and not my real estate, private equity, or direct private investing. My PE returns in particular have been astronomical (thanks to a once-in-a-lifetime homerun), but I don't discuss those much here because these investments aren't suitable or available for most on this board.

Hope that was informative.

>>983625
>>984248
Thanks.

>>981946
>Show me one study that proves trading is unsuccessful.
No, I'll show you four.

http://www.econ.yale.edu/~shiller/behfin/2004-04-10/barber-lee-liu-odean.pdf
http://www.investorhome.com/daytrade/profits.htm
http://faculty.haas.berkeley.edu/odean/papers/Day%20Traders/Day%20Trading%20Skill%20110523.pdf
http://www.iassa.co.za/wp-content/uploads/journals/075/iaj-75-no-3-ryu-final.pdf

>inb4 that study from the 90s that uses data from a Korean exchange
>implying that the Korean stock exchange is any different than any other market for purposes of evaluating trading efficacy
The denial is real.

Also, let's remember that you're a sullen frogposter with thousands of dollars in trading losses seeking day-trading advice on 4chan. You're not exactly in the strongest position to criticize anything or any one, kid.

>>981914
>Now post the unedited screenshot you grumpy motherfucker
You could have also asked nicely.

>The balances matter because of the psychological factor.
No. Just no.

You can't overcome statistics with a positive attitude. Trading is a losing strategy no matter how cheerful you are as you flush your money down the toilet.

>>980918
>Yes and then they paid their employees and their own operating costs but let's just assume they equal $0
They also pay some outside firms to manage some of their funds (e.g., PRIMECAP, Wellington, William Blair, Oaktree, Lazard, etc.). Indeed, most of Vanguard's actively-managed funds are run by one or more external advisors or sub-advisors.

Not that there's anything wrong with that. The fees charged for these funds are almost always less than the external advisors charge their own clients.

But, relevant to this thread, it is an expense nonetheless.

>>980837
>how does vanguard canada work?
Vanguard Canada is a wholly-owned subsidiary of the U.S. parent. Canadian customer benefit indirectly from the investor-owned structure in the U.S. because the parent isn't siphoning profits for the benefit of outside shareholders. So the effect is essentially, but not exactly, the same.

>>980509
>Vanguard made approximately $4 BILLION from fees on their index funds this year.
Bait or just stupid?

Vanguard is owned by its funds, which in turn are owned by their investors. Therefore, owning a Vanguard fund is like owning stock in Vanguard. I'm fucking thrilled to see Vanguard making money.

>>977672
>can you show me like something, I need some motivation
Something like this? All index and tax-managed funds. Easy money.

>>977681
>If I had 12 million dollars to invest I would become a billionaire sheesh
I'm sure you would, Warren.

>>977682
>Holdings?
Another day, perhaps, I'll repost the detailed holdings. In summary, it's about 45 different funds, ETFs, and MLPs. Mostly index and passive funds, but also some actively managed.

>>977659
>Good shitposting, you spoiled inheritance faggot
B--b--b--but I didn't inherit my wealth.

Oh well, don't let the truth get in the way of a good meme

>>977281
Are you me?