Started by Guest rotherford , January 26, I'm planning to acitively manage my Roth IRA from now on and I was wondering if there are any tax consequences for actively selling and buying stocks with an IRA account. Right now I'm invested in a mutual fund in my Roth IRA that I want to sell and then I plan to buy some stocks with this money. To my understanding, as long as I don't contribute more than I'm allowed to or take early withdrawals, I think I can actively trade without any tax consequences.
I just want to confirm this before doing so. There is no tax consequence when trading, but you have pay commisions on all that activity. The more activity, the more commissions Taken out of the sweep-account thats connected to the brokerage account thats connected to the Roth account To trade frequently and be successful means that you have some kind of "edge" in guessing how markets will react to economic news.
Your commissions will increase - but realistically, in an era of internet trading at low cost this is NOT the driving issue. Trading more frequently vastly increases the amount of time you need to analize and monitor. The day traders I know watch multiple monitors every hour the market is open, every day the market is open.
There is an addiction element to this. You can be successful just using mutual funds. You also need to pay more attention to your portfolio balance - not getting too concentrated in one niche where you are successful.
A Rant on Buying Individual Stocks vs Mutual Funds. Most of the time, I am a "stock picker". It may help folks to understand the difference between choosing the mutual fund or an individual stock route of investing if I disclose my analysis routine. I generally have between 20 and 30 stocks in various accounts.
I spend typically over 8 hours in research before I ever buy a stock, sometimes more than 40 hours of research time. Research means visiting the company website, reading all or parts of the annual report and 10Q, reading ALL of the business wire articles for more than the past year, reading similiar material from competing firms, visiting a few "fee" based message boards to look for posts on the company, and sometimes making a small spreadsheet of key components of the companies business.
I probably look at about 50 companies each year, and at best I find 5 were I buy shares. Acquiring a position is often a multiple step process. I see no shortcuts to this level of work. I should spend more time on the sell side of the equation, because I make more mistakes here. Investing takes gobs of time if you do it rigorously. Perhaps if you mostly have mutual funds and only a few stocks you can reduce the amount of time. Sometimes people ask me about a stock that they own. I am often surprised by how little they know about the company Folks often know more about their favorite TV show or their car then they know about their equities.
There is not a single stock that I own that I could not stand up in front of a room of adults and talk for 10 minutes about their business, competitors, industry trends, etc. That is one of the standards I use for making decisions. If you can't talk for 5 minutes about a company, perhaps you should stick with mutual funds. There are now some commercials on TV that show some guy running in a 10K stopping at a cafe to borrow a laptop and order shares of a trendy sneaker company from an online broker.
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There is another commercial where a guy buys some jeans his daughter thinks are hot. Thank you everybody for your input. As far as actively trading and selling, I didn't mean that I would be doing day trading. I've just decided to take more control over my ROTH account. Anyway, with gold, silver, other precious metals and base metals, and energy commodities in general in such a bull market right now - and possibly continuing for another years - picking the "right" company is irrelevant really.
What I mean is that with a few choice mining stocks, whether they are solid gold or silver primary producers, or major mining companies like BHP, or.
So, in this scenario, having a balanced portfolio in tech, service, finance, and so forth is moot. Focusing on one sector, although not recommended as part of conventional wisdom, can be equally rewarding, if not more so, given the commodities bull market we are in now. Billiton is a big resource company in Australia. I bought shares around 23 and have been pleased by the gain. Most people do not know this company, so Kudos to you for finding it.
I also overweight a few sectors when I make investments and may concentrate on a small number of firms. It has served me well for many years, but for most folks the dangers are too great, especially if they are playing last years momentum, have less experience or can't monitor there positions daily.
My 35 years of investing experience tells me don't get to enamored with energy stocks and gold.
They have been a great story for more than a year. Energy companies will also have good earnings for , but I doubt they will continue on this hot streak for years. I particularly do not understand why you would think that commodities will be in a prolonged bull market like years. The last century has shown that commodities often run through much shorter cycles.
Frankly, out of favor sectors financials are the first one I thought about often return double digit returns after a prolonged drought.
It is still hard to get a feel for your investment experience Andy Kessler, who was a successful hedge fund manager during the tech boom, had an idea which I found compelling He called it "Investing in the fog" So if you're not willing to risk being in the fog, as it were, you're probably not going to make outsized returns I think each of us has a certain tolerance for fog I try for good ideas to outnumber bad ones BHP is your answer.
Five years of a solid steady rise. You have to look at the global picture and all the macro factors driving this commodity bull. Although I respect the number of years of investing experience that you have which so happens to equal my age , I strongly believe, from all the reading and research, not to mention my experience of living and working here in Asia for the past ten years, that this commodity bull is just in its infancy.
And even though I am going to mostly focus on commodities now and in the near future, I do have mutual funds in emerging markets and hold some Korean stocks in other sectors.
And within the commodities sector I do do my research and make sure the companies are ones I want to invest in. I just believe that placing my money in this sector is going to be much more rewarding — it has been already.
That being said, if this commodity bull doesn't continue for the next 10 to 15 years, I'll make the necessary adjustments. BHP is also incredible because it is sitting on huge amounts of uranium through its acquisition of WMC Resources.
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Australia is set to become the biggest supplier of uranium in the future and BHP and Rio Tinto are very well positioned to take advantage of this. Uranium is dirt cheap now, even though it is at a record high for this century. For the amount of energy that it can provide, it's simply mind-boggling. China is planning to add a number of nuclear reactors in the next ten to fifteen years and it has been talking with Australia about buying uranium.
And because peak oil is a harsh reality that we should probably acknowledge, it only pays to pay attention to all the effects that it has already brought and will continue to bring in the world economy at large.
Which brings me to this If it costs more to mine, and supply can't meet demand, then it only follows that the price of metals will increase. I know you've probably been bombarded by info about China and India. But, commodities become pretty compelling when you consider their industrial drive and appetite for commodities. At present, only like 20 million of China's 1.
Of course, the counter argument of a global slowdown could be made. In that case, I think I'd rather have much of my money in commodities still. As I write, the US is going after "cheap" oil in the Middle East costing billions of dollars in military expenditures using hard power and creating enemies right and left, while China is busy securing deals with its neighbors and African nations with soft power and making potential allies and economic partners.
I don't think Russia and China, among other nations, were very pleased to be squeezed out of oil deals in Iraq. This ties in with another perspective: And as everyone knows, all wars have been about resources. Is that going to be any different in the future?
In a sense, all nations are at war with each other every second - economically and politically. Whether we like it or not, the US is not going to be the big kid on the block anymore. It could happen sooner than we think if countries here in Asia really start to pull together and try to get past bad blood — ie.
Cooperation and integration are key — there are talks about having an Asian currency along the lines of the Euro. Korea is trying to position itself as a hub within NE Asia and increase trade links within Asia even more.
China, Japan, and Korea all have trade surpluses and strong currencies — but these strengths can also be weaknesses if not balanced properly. I think the dollar will continue to get weaker down the road — could happen even quicker if Iran succeeds in selling its oil for PetroEuros. Russia, a major oil supplier to Euro, wants this is as well.
Why would Russia want to sell its oil in dollars to Europe? So, my guess is that you are going to see Russia and China step up to the plate for Iran. The funny thing is that during the Cold War, with two great superpowers playing off each other and aligning countries behind them, the world was a more politically stable place there were other factors as well of course.
But, you have a lone superpower, the US, and other nations jockeying for power, influence, and resources. And with all of this instability, central banks and people will try to buy even more gold and silver. Both are cheap right now by historical valuations. And it seems that both are in the beginning stage of a bull cycle again.
They went through a huge bear market through most of the 80s and 90s and but from both have been increasing steadily and strongly. I've done my research and strongly believe that both metals are only going higher and higher. When will they top? But, by leveraging this ride through some good mining stocks, the ride might be wild at times. One, in particular, Yamana Gold AUY has done well for me.
However, this cycle is not going to go downward for any great length of time anytime soon. Silver is set to rise even more than gold for various reasons — industrial applications, monetary value in India, etc And copper will do well as well. I like one company in particular — Northern Orion Resources NTO , because of its huge upside potential. One thing I will never forget is when Korea had to take a bailout loan of about 50 billion dollars from the IMF.
I remember the scenes of people lining up to sell gold — gold figurines, jewelry, bars, etc. For me, this underscored two important things. One, how strongly patriotic many Asian nations are. This strong nationalism is reflected in so many ways, and even points toward the great successes that NE nations have pulled off economically. So, they are busy securing deals and locking in channels to needed commodities. The second point - how gold has always been used as money or as a store of value.
When our son turned one not too long ago, relatives and acquaintances gave him gold rings and bracelets. Well, the stock market has done really well here in the past few years — last year it was one of the best performers in the world I think Egypt did the best.
That is, until a few weeks ago when the stock market corrected itself. Then there were some articles about gold and gold certificate accounts that you can open up at a major bank here. Gold has climbed well against the won, too, even though it is one of the stronger currencies. Gold accounts at banks. Japan has them as well. My point here is that, I think, investors in the States and other Western countries, in general, have looked down upon gold as an investment vehicle.
Credit can be given to the extended bear market that it suffered. However, as a hedge against inflation, I think it ranks highly. As a side note - many of the best performing mutual funds in the past five years have focused on energy and commodities.
Take a look at Vanguard's Precious Metals and Minerals VGPMX - two of their biggest holdings are BHP and RTP, no small coincidence.
Some of the best emerging markets mutual funds in the last five years have been heavily weighted in energy and metals. During the tech boom, when it really started to explode, when everybody, including the average Joe, started throwing money at anything tech or Internet, it was too late…most of the stocks were already fully valued or way over valued. Perhaps the same thing will happen 10 years later or even sooner when everybody realizes that commodities like precious metals, base metals, and uranium are hot.
Also, perhaps the valuation of mining and energy stocks should be treated differently, given that you are talking about hard assets that are in extremely high demand and in short supply.
I still think your focus on commodities and energy is way too simplistic. Think cycles - and they rarely last more than a few years. Sure China is growing, but much the same was said about the dominance of Japan when you were still in high school and Japan's stock market and economy turned skunk - and more or less still is.
You mentioned mutual fund performance over past 5 years I think if you go back and look, the "bang" happened in the last two years. There were few commodity markets were attractive places to invest for almost 12 years prior to this recent surge. Be careful about projecting for a decade what you have witnessed for two years. You may want to check www. They have over 1, members Somewhat related is a once a year Investfest in Florida this year meeting - this group has been around for three years.
Last year's meeting in Pigeon Forge TN had about 80 attendees for a three day event. Investfest is a yahoo message group. Good luck with your investments.
Don't post investment suggestions here - its the wrong forum. Examples are always welcome, but we don't want folks to think this site has silver bullets. If anyone cares to look, you can find out that silver and gold had a 9 year bull cycle in the s. My focus on commodities and energy may be too simplistic for you to understand, but it is working well for me and I think it will continue to do so.
The problem is that your analysis is way too simplistic and you're not really looking at the bigger pictures. China is no Japan. You're comparing apples and oranges. And the world we are living in right now is not the same as it was in the 80s and 90s. You forgot India as well.
And maybe you shouldn't leave out Russia and Brazil. Anyway, I could rant on, but it would be a waste of energy. If you keep your eyes open and do your own research and keep a balanced approach, then you might see things differently.
There are no silver bullets, and individual investors are free to make up their own minds. I talked about them just for reference. People can make up their own minds about them. Two bad attributes for any investor are: In combination they can create a lot of pain. It gets worse if you lock on to selective historic data to justify your beliefs. You assume that I know very little about commodities. My work experience spanned energy and raw extractive materials for about two decades including the coal, oil, natural gas, copper, forest products, cement and aluminum.
My co-worker for a decade was a cane, soy, beet, and corn futures trader. I really don't need my eyes "opened". My comments on this message board are directed at both the person who posted the question and the perhaps 20x more who read are general readers. This thread has gone far off course for that second group. I don't see much point in getting excited about a precious metals boom in the s related to the Hunts and the earlier Middle East crises.
That was over two decades ago. And while most of these events unfolded, gold and silver went sideways. The world is full of interesting prospects for investing. I would not suggest a narrow focus. I told you about VF because it is more likely to have posts on extractive minerals. If you explore the VF website you will find that the most successful of these investors are constantly challenging their market view and investment conclusions.
The more active members often post their entire portfolio positions monthly, which gives a more honest picture of performance than after-the-fact claims. VF, like the marketplace, is a competition of ideas. Unlike Yahooland, VF requires a high level of personal decorum. Performance claims and factual statements are subject to scutiney - 1, members can challenge what has been said and often do.
There is minimal touting, minimal fluff VF is one of about a dozen "low fee" sites that attempt to elevate the level of discussion about investments. Being enthusiastic about a sector is fine, especially if it encourages research time. But, markets are just not as predictable as you have implied in your about comments about commodities. Hardly anything is a great idea for many years - in part because success attracts more money, business expansion and eventually in resource areas It is the nature of markets to overshoot and undershoot, and both problems cause market "corrections".
For three years running, crude oil tankers Frontline, VLCC, etc. But, in the fourth year of a boom, tanker stocks stalled and started to slide backwards. While many new tankers were brought on line, the reason for the decline was "loss of momentum" - that is enthusiastic investors started to leave when they could not be guarenteed every bigger earnings announcements. Markets are complex and you should not expect them to be predictable. You need to be a member in order to leave a comment.
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All Activity Home Retirement Plans IRAs and Roth IRAs buying and selling within Roth IRA. Thank you in advance for any response regarding this. Share this post Link to post Share on other sites. My husband hase some individual stocks and mutual funds in his Roth IRA. I manage his account There is no tax consequence when trading, but you have pay commisions on all that activity. Post again if you have additional questions.
Good luck with your choices. A Rant on Buying Individual Stocks vs Mutual Funds Most of the time, I am a "stock picker". Nope, nada, not a chance. Edited January 30, by John G. What I mean is that with a few choice mining stocks, whether they are solid gold or silver primary producers, or major mining companies like BHP, or the uranium blue chip company Cameco, you are much more likely to make good money than with a lot of the companies in other sectors.
Something I found interesting in a "for fee" investor discussin forum: And you're wrong about mutual fund performance - it has been over 2 years - try 3 or 4 for many. I only mentioned a few stocks that have done well - without any intention of pumping them or making others buy them. Anyway, thanks for suggesting the ValueForum message board. Edited February 3, by John G. Create an account or sign in to comment You need to be a member in order to leave a comment Create an account Sign up for a new account in our community.
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Jump to content IRAs and Roth IRAs BenefitsLink Message Boards Existing user? Nearly 30 years investment experience including running a hedge fund, IPOs, real estate LLPs, venture capital, and private equity. Personal investing style focuses primarily on stock picking. Academic degrees in architecture and regional planning. Work experience in consulting and corporate planing. Edited February 3, by John G Share this post Link to post Share on other sites Create an account or sign in to comment You need to be a member in order to leave a comment Create an account Sign up for a new account in our community.
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