The bet: Will these average 12% return including dividends in 1 year?

[Realist]

If Graham recommends it, Buffet does it, and many have followed it, it is good enough for me.

I bought FGL, WDC, CBA, IAG, RIN, etc. etc. all with the knowledge I will not need to sell them, the dividends will get bigger and I wont pay tax!!

$100 at 20% profit per year but 50% tax each year for 5 years becomes.

$100
$110
$121
$132
$145 (take out the extra brokerage and you've made little)

$100 at 20% profit and no tax until you sell 5 years later becomes

$100
$120
$144
$173
$207 (less 25% tax on $107) = $180

Still you know best, Buffet is obviously wrong

 

[Realist]

Any sells today Tech/a?

30 minutes in, and I notice most of your stocks are red.





Just winding you up, good luck, I hope we both make a mint!

 

[Nicks]

If you trade, and I hold, I suspect you will may slightly before tax, and I'll win after tax as I pay none.

I thought you get a 50% discount on CGT if you hold for more than 12 months, but you still have tax?

 

[Realist]

I thought you get a 50% discount on CGT if you hold for more than 12 months, but you still have tax?

Correct, but if the competition is for 1 year and I do not sell in that year, I do not owe tax in that year - I pay zero tax, yet every time Tech/a sells he pays 50% tax.

Semantics sure.

But you need to bear in mind I consider this very carefully before buying any share, and especially before selling. I bought most of my stocks for dividends and because I aim to hold them for many years.

Tech/a bought most of his stocks (I am assuming) for short term profits.

It is a marathon runner agaisnt a sprinter. He may beat me over the first few years but once compouding kicks in I will win.

 

[barney]

Hey Realist and Tech, you need not take anything I say seriously (but you can if you like) If the competition is to be totally fair and "judgeable" by your peers/admirers (yeah OK I think your'e both smart ... what can I say!!) , Shouldn't you both a) set a start date ......... b) Paper trade your selections for the period in question ( and post results) so that a "true judgement" can be considered over the time in question .............. Using "positions" already in play is like starting a race while the other guy is in the dunny... so to speak (whichever guy that may be ) ...... Hope that makes sense ....It does to me, but I've been subject to loud music for much of my life ................... For the comp to work, it must start from a clean slate!!!!

PS I STILL want to hold the carton (less tax) ........ Have I made that clear yet!!! Good onya both, Barney. (even Barney has some good ideas at times..... sometimes I impress myself ............mmm .......... gotta cook tea for my wife ........... she is not happy with the time I spend on the computer

PPS Lets Assume $100,000 starting bank each, and see who finishes best in the period of time agreed on ....... ???? Hows that sound?

 

[Realist]

Hi Barney, the starting date was yesterday.

We've listed our shares and starting prices already.

I probably wont sell any, Tech will trade a few. We'll then argue over tax as I wont have any and he will.

There'll probably be no clear winner.

Still it'll be interesting and a bit of fun!

 

[tech/a]

There'll probably be no clear winner.

Of course there will!!

Ill ignore your tax if you ignore mine.
If you cant take your profit at sometime then when is it a profit?

Frankly if you never sell them and never get taxed then have you made a profit?---not according to the tax department.

Simply say at the end of the period (12 mths) profit from BOTH methods is taken.Wether its nett or gross profit who cares.

But if you want me to give you a 50% head start--thats a bit rich.

 

[nizar]

Correct, but if the competition is for 1 year and I do not sell in that year, I do not owe tax in that year - I pay zero tax, yet every time Tech/a sells he pays 50% tax.

Damn that will be so embarrassing if u STILL lose

 

[Realist]

Damn that will be so embarrassing if u STILL lose

Hahaha.

You need to bear in mind I've bought most of my shares with longterm goals in mind.

Of course I do not expect Fosters, IAG, CBA, Fletcher Building, Westfield etc. to rocket up soon and make me megabucks.

Infact Fosters is already slightly overvalued because of takeover rumours - but I'll still hold it for the yield - it may go down a little this year but I wont sell it!

But I can safely hold those shares for many many years and get solid but small price increases and nice dividends and PAY NO TAX!!!

One of my key aims when purchasing a stock is to hold it longterm to reduce tax, Tech doesn't do that - fair enough.

But when comparing my results to his you need to bear in mind he pays alot of brokerage, subscriptions to information, subscriptions to trading tools, and tax - I pay none of those at all.

And at the end of the day it is who makes the most after all expenses are taken into account isn't it?

If you disagree then go get a managed fund with a margin loan and tell me how well you are doing (after all expenses) !

 

[bowser]

Good work guys, the post will be interesting to watch.

It just goes to show that when it comes to trading you need to find a system that suits your personality.

Good luck!

 

[nizar]

If you disagree then go get a managed fund with a margin loan and tell me how well you are doing (after all expenses) !

I made 70%nett last year from Colonial First State Geared Australian Share Fund (i moved in and out a fair bit, but no entry or exit fees were incurred)

 

[barney]

Hi Barney, the starting date was yesterday.

We've listed our shares and starting prices already.

I probably wont sell any, Tech will trade a few. We'll then argue over tax as I wont have any and he will.

There'll probably be no clear winner.

Still it'll be interesting and a bit of fun!

Bugga, and I thought I was on to a good idea ............. I still think the comp should have been started from a clean slate!! .............. its not too late to start fresh you guys .... worth considering ....... (reckon I've missed holding the "carton" for sure now ................. double bugga!!

 

[Duckman#72]

But I can safely hold those shares for many many years and get small price increases and PAY NO TAX!!!

One of my key aims when purchasing a stock is to hold it longterm to reduce tax.

I have to agree with Tech on this Realist. You are too driven by tax.

I would have thought that the investment decision comes first, followed by the execution, and if all goes to plan - followed by the profits(hopefully). You can then plan your tax strategy.

If you have a "buy and hold" strategy - great but don't sell it to others on the basis that you are doing it for tax. After you hold for 12 months you are not saving yourself anything. Hold a share for another 10 years if you like but you won't save yourself any additional tax.

Doesn't your strategy stop you from selling underperforming shares?

You will make more money working on maximising your profits - rather than minimising your tax.

Duckman

 

[tech/a]

You will make more money working on maximising your profits - rather than minimising your tax.

He may never be rich but hell he'll never pay tax!

Key here is minimising not AVOIDING tax.

How do you feel about death?
Got any hints on that?
Seems youve avoided the first Trueism!

 

[Duckman#72]

He may never be rich but hell he'll never pay tax!

Key here is minimising not AVOIDING tax.

How do you feel about death?
Got any hints on that?
Seems youve avoided the first Trueism!

Yes you are right Tech - I stand by my first comment but it sounds much better by saying "You will make more money by working on maximising your profits - than you will by avoiding tax". Becasue that is what he is doing.

 

[clowboy]

Well hells bells tech,

Lets make a list shall we,

Computer - depreciatable
Internet - tax deduction (scaled)
Phone - tax ded (???)
Rent/mortage - tax deduction


And the list goes on and on and on, don't forget to include all them in your results.

Also how does Tech pay 50% tax? the most he can pay as a trader is 47% at the top tax bracket

 

[Realist]

If you have a "buy and hold" strategy - great but don't sell it to others on the basis that you are doing it for tax. After you hold for 12 months you are not saving yourself anything. Hold a share for another 10 years if you like but you won't save yourself any additional tax.

You do actually.

Make 20% after each year and sell and you end up with 15% a year.

Don't sell and let it compond and you are way ahead after 10 years.

What in theory you owe in tax compounds for you, not the government.


20% returns compounding
Pay 25% tax :no tax

100 100
115 120
132 144
152 173
175 207
201 248
231 299

 

[Realist]

How do you feel about death?
Got any hints on that?

Yeah, my tip is to avoid death for as long as you can.

Much like I try to avoid tax.

The longer you can avoid them the better off you are!!

 

[Realist]

Doesn't your strategy stop you from selling underperforming shares?

YES.

It also stops me from selling overperforming shares (MRE for instance).

Others will beat me in the short term, but my low brokerage, no subscription fees, no trading tool fees, and no tax will mean I win in the end.

 

[barney]

Yeah, my tip is to avoid death for as long as you can.

Much like I try to avoid tax.

The longer you can avoid them the better off you are!!

Avoid death .................. I wonder if anyone will come up with an argument against that idea