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

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Would you guys rather pay tax as you earn money? Or pay it at the end of the year in one lump sum like some Asian countries do?

Why does the Aussie goverment use PAYE?

It uses it so it gets the tax now!! Before inflation diminishes it, and so it can invest it and you can't.

Were we all to pay tax a year later than it was due we could invest what we owed and make money while avoiding the impact of inflation right?

The longer you leave paying tax the better off you are!

Get it?
 
I have a couple of friends who are much older than me who simply live off their dividends year after year .............. Personally I enjoy the cut and thrust of the market (trading in and out etc ..... I am a bit impatient though) , but I repect how much patience and discipline Realist (and my friends) have, to sit back and "watch" without being tempted to sell a share out just because it is dropping in the short term. Everyone has a different approach, and that has to be a good thing. Cheers Barney.
 
Its been a week ........... How often do we get updates from you guys (Just kidding ..... making sure the thread remains active .........)
 
Is anyone taking side bets on this one??

The farm on Tech! :
 
Realist said:
The longer you leave paying tax the better off you are!

Get it?
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Hey Boys,

It seems that everyone is getting hung up on the Tax issue.. I thought that the aim was to increase your current wealth, utilising the stocks listed and by the trading method selected, by twelve percent. Regardless of tax..

Techs method (if he buys and sells) will obviously attract tax, Realists (if he simply holds) will not.. who will increase thier wealth by the greater amount after the twelve month period?? Isn't that the aim of the comp??

I'll watch with interest no matter what, so go to it boys..

Regards,

Buster
 
Realist said:
And at the end of the day it is who makes the most after all expenses are taken into account isn't it?
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Ahh..

My point exactly.. disregard my previous post..

Regards,

Buster.
 
I'm down 0.24%.

Lost on CQT, CAQ, JPR, FDL, RIN and HCY, the rest are okay or up...

Early days....

I count my starting prices about 4 days after Tech does though, so for instance he has MRE for $4.98 I have MRE at $5.31 - so infact I have lost money on it in this comp, despite making 120% already in just 4 months.

Still as I said early days, judging a comp on 1 week is silly. If Zinc and Nickel prices drop Tech will lose out.. I'm more diversified but more reliant on uranium and copper.
 
Realist, how old are you, and when do you plan to sell some shares to use the money?
Is your investment strategy to amass a fortune for your children/family to inherit? Or will you perhaps sell and have a fun retirement at the age of 65 (if you live that long)
 

Early 30's..

I sell some "trading" shares as I see fit, although I am always hesitant to sell, and always consider tax implications and aim to hold bluechips like Westfiled, Fosters, Commonwealth Bank etc. for as long as possible.

My strategy is to be rich, and spend all the money on booze and broads, it wont happen overnight, but it will happen!!

I'll retire young, live off dividends... :

Do you think you can get rich quick on the stockmarket?
 
I count my starting prices about 4 days after Tech does though, so for instance he has MRE for $4.98 I have MRE at $5.31 - so infact I have lost money on it in this comp, despite making 120% already in just 4 months.
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Hell I dont mind include MRE and backdate 4 mths ago.

4 mths ago my portfolio was $299,000 today $358,000 thats an increase in 4 mths of 19.7%.(Do I win?)

Realist its my veiw that your portfolio is far to diversified and as such will perform pretty much to the market.But hey thats from someone who "doesnt know how to trade"
 

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tech/a said:
Hell I dont mind include MRE and backdate 4 mths ago.

4 mths ago my portfolio was $299,000 today $358,000 thats an increase in 4 mths of 19.7%.(Do I win?)
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No, cause I know how much you pay in fees, tax, brokerage, and subscriptions.


Realist its my veiw that your portfolio is far to diversified and as such will perform pretty much to the market.But hey thats from someone who "doesnt know how to trade
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Exactly, the market overtime always goes up - I'm happy to follow it. If the market goes up a measley 7% and I get 5% dividends there is 12% there!!
 
This simple spreadsheet shows the effect of deferring paying tax on returns. There are three calculations;

1.the first shows a strategy of borrowing the funds to pay the tax owed which is assumed to be 30%. The balance of the account is always topped up via a margin loan to the end of year balance prior to the tax being paid. The interest on the loan is paid as we go, and the loan funds repaid at the end of the term.

2. The second shows the effect on the same returns by paying the tax from the account balanceas it is due.

3. The third shows the effect of a buy and hold system with less returns than the trading account. Instead of assuming 25% a we allocated 18% pa.The tax paid is assumed to be 15% on all capital gains.

Interesting results and food for thought.Always do your own research. If there are any error I apologise in advance.

Cheers

Shane
 

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Thanks Shane.

Seems to have shot the tax arguement.

Realist I can count my Dividends as well?
They arent even included in the table!!

Your nett return you keep spuiking on about keeps deminishing.
From 12% to 7% plus dividends.

How about we settle for simply a profit.
I doubt you get that.

Frankly this is a pathetic joke.
Anyone can pick a portfolio of X shares and sit on them indefinately.

Anyway something may be learnt from it.
 
tech/a said:
Realist I can count my Dividends as well?
They arent even included in the table!!
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Yes of course, you should always include dividends!

You don't think I bought CBA, IAG, FGL, WDC and others in the hope of excellent capital returns do you? Of course not, I bought them for their dividends!! Dividends must always be counted.

Anyone can pick a portfolio of X shares and sit on them indefinately.
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Actually virtually no-one can, sounds silly but people are far too impatient and look for quick fixes.

Get rich quick schemes sell far better than "The Intelligent Investor".

If you eat healthy and exercise you will lose weight - but every womens magazine has a new fad diet each week.

People have a perverse way to make something easy seem difficult.

Had you bought into Westfield, BHP, Fosters, and CBA 10 years ago and just held you'd have made more than every single trader here! (don't forget to include dividends). And that aint by picking unknowns and getting lucky - that is just by buying already large succesfull companies.
 
Shane Baker said:
1.the first shows a strategy of borrowing the funds to pay the tax owed which is assumed to be 30%.
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Why is tax 30%?

It is 50% from what I know if you hold less than a year.

Your chart is not that useful sorry, you need to remember traders pay alot more in brokerage, often trading software fees and subscriptions, and often get no dividends, also they often make losses, 25% per year is not a return traders consistently get on all their capital - otherwise there would be many billionainre traders and there certainly aint!

Investors get good dividends and pay no expenses, compounding works for them and they rarely if ever make losses because dividends alone make a bad year adequate.
 
Realist said:
Yes of course, you should always include dividends!



Actually virtually no-one can, sounds silly but people are far too impatient and look for quick fixes.
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I agree here.

Get rich quick schemes sell far better than "The Intelligent Investor".
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Hell would you say they perform better than most???I mean "The Intelligent Investor".

Infact from those Ive seen I would say that most stock picking newsletter types are no better than the fish oil salesmen.


If you eat healthy and exercise you will lose weight - but every womens magazine has a new fad diet each week.

People have a perverse way to make something easy seem difficult.
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Its human nature to think that the more complex something is the more valuable and successful it must be. I definately agree with your statement.



We are actually on the same page. Most wish to trade short term with pecieved massive gains. This is why 95% fail. Its a bugger of a way to trade,stressfull,time consuming and anything but simple.
Yes it can be done ,Ive traded both ways,much preferring the portfolio method.
The only way Id trade serious capital.Unfortunatley most beginners dont have serious capital.
 
When I say the Intelligent Investor - I mean Ben Graham's book, not the "trading newsletter".

That book for $45 is far better than any and every get rich quick scheme obviously. Yet it does not sell well and get rich quick schemes do.
 
Realist

Why 30% ....because it depends upon the structure under which you choose to grow your capital. A company pays 30%...a trust may pay much less.

25% is acheivable as an CAGR. Have a look at Ed Seykota returns here www.iasg.com\ He has acheived 26% return CAGR since 1987.

There are 47 funds with a CAGR of greater than 25% since inception. Some have been around for a long time.

Tech has shown on here and ReefCap how a very simple system (often the best IMO) can acheive outstanding returns.

I may have missed it but you didn't argue the point about 18% CAGR for the buy and hold strategy or its generous 15% tax rate.

Good luck with the bet. It looks like you'll need it

Cheers

Shane
 
tech/a said:
Unfortunatley most beginners dont have serious capital.
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And therein lies the problem.
The attraction of the stockmarket lies in T+3. They say u need money to make money which is great after your established. But when you're just starting out, its good to know u can have a few Gs in the bank and be trading 25 or 30k parcels. A mate of mine new to this whole thing was ecstatic a couple of days ago, when he, usually a small player, did a quick intraday trade (25k), and made $2.5k in a few hours. The next day he lost about $2k. Which highlighted the potential for those quick trades. And also of course highlighted the potential for serious damage if u dont control your losses ie. use stops.

But yeh, well for me, im gonna be trying to do some intraday trading when i have the time to be at the PC. Itll be nice to make some money to supplement my long term zinc and uranium holds.
 
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