started a business in early 2011, all $18k in earned income is from that. write offs include health insurance (im self employed so i can write it off and it is the biggest chunk of write offs i have) and other standard business expenses (laptop, desk, monitor, some meals/gas, etc).

if i write off everything that i could it would be over $18k which would mean i had $0 earned income so i couldnt contribute to my roth ira for 2011. so im thinking if i only write off $13k instead of $18k i will have $5k in earned income making it possible for me to add $5k to my roth ira.

certainly not trying to do anything illegal and idk what part of that could be considered shady. its up to me what i write off and what i dont (as long as its all legitimate business-related write offs obviously). correct me if im wrong though.

I would recommend you do some research regarding your issue.

Tax laws are very weird. I doubt you're forced to take the gas/meals/etc, but you might be forced to take depreciation on the assets if you ever want to depreciate them in the future (laptop, desk, monitor, others?).

Generally speaking, the tax code tells you how to depreciate things. You don't really get a choice. Of course, you could probably not report the asset, but then I'm not sure if you can depreciate in future years. If that's the case, you would be passing up significant depreciation in the future. I bring up the assets b/c they have an impact on many future returns, not just your 2011. 2011 depreciation should be pretty minimal since it was your first year.

If you want to make your depreciation minimal, make sure you do not take Section 179 expense or bonus depreciation. 179 would likely depreciate the entire value of those assets.

If you have any questions, feel free to respond. I check the forum a lot.

EDIT: I'm not a tax professional or CPA. These statements are merely my opinions. Consult a professional if you want the best answer.

Edit 2: did you have any organizational or start up expenses? I believe if you fail to claim those in the first year of business, you lose the ability forever.

i appreciate the responses, all that makes sense and you are probably correct. i will bring up my 2011 roth ira contributions to my cpa and see what he says.

The companies own the factories. Thus, even if you have hyperinflation or currency collapse the stocks often survive. Take Weimer Germany, Argentina of any country that experiences quantitative easing. After currency collapse in Germany in 1930s the stocks survived and the bonds did not.

In Europe countries can't print, they have to go to european central bank. Furthermore, the country to get a bailout must be forced to austerity measure. In the USA, take the post office. It has been in the red for 4 years and they are able to kick the problem down the road because they can just print and run deficits.

Debt in Greece is really unsecured debt as far as I see. They don't have to pay it back, but the big banks claim they will fail. Problem in Europe is they don't seem to have limits on factional reserve limits thus the get highly leveraged banks.

I would not be afraid to buy a stock in Europe for the right price. TEF pays 13% dividend and it seems safe. Total pays 6% and owns sunpower.

The companies own the factories. Thus, even if you have hyperinflation or currency collapse the stocks often survive. Take Weimer Germany, Argentina of any country that experiences quantitative easing. After currency collapse in Germany in 1930s the stocks survived and the bonds did not.

In Europe countries can't print, they have to go to european central bank. Furthermore, the country to get a bailout must be forced to austerity measure. In the USA, take the post office. It has been in the red for 4 years and they are able to kick the problem down the road because they can just print and run deficits.

Debt in Greece is really unsecured debt as far as I see. They don't have to pay it back, but the big banks claim they will fail. Problem in Europe is they don't seem to have limits on factional reserve limits thus the get highly leveraged banks.

I would not be afraid to buy a stock in Europe for the right price. TEF pays 13% dividend and it seems safe.

etfs

What do people think about tobacco companies? Isn't it like an insane gold mine for lazy investors? Are the stocks overvalued?

I don't know much about stock market yet but I was looking at PHILIP MORRIS INTERNATIONAL graph and the returns seem pretty good. Also I don't know how can these guys ever die even tho I'm a super anti smoking guy IRL

i feel like there would have to be a worldwide movement to ban smoking in order to even think of unloading a tobacco position. Or a worldwide movement that makes investors hate dividends.

Help me help my mum:

Hi everyone.

As said, this is for my mum who is aged 62.

Living in London
Income is a pension of about £40,000 or £36,000 after tax. Bills and living per year is £30,000.
Risk tolerance is medium
Timeframe for investment could be a little tricky. My mother wants to move houses and currently owns her house (worth about £300k) with no mortgage. She also has about £500k in cash. If she moves to another place I am estimating that it will cost around £600k, leaving her ~ £200,000.
Debt is zero.
Included in her cash calculation is ~£130,000 invested in gold.

Thanks for any help. It would be much appreciated.

does your mom (er, ahem -- mum) work or is she retired?

why does she want to move? specifically, why does she want to move to a house worth roughly 2x as much?

does she have other retirement savings/investments/accounts?

what exactly is your question? what to do with her liquid assets?

i'm not a believer in gold, but i think that even gold advocates would tell you that having ~15% of her net worth (and ~25% of her non-real estate net worth) in a single asset is an awful lot.

Hi

She is retired. She basically wants to move because my area has gone downhill a lot over the years.

I was basically just giving an account of her financial situation and what to do with the remaining cash. She has this cash in various savings accounts which pays roughly 3% (2% after tax).

i will recommend, as i usually do, a target retirement fund (or whatever the equivalent "i am now retired and need income" is -- it might be called a fixed income fund? or that might be something different.). this would give easy exposure to a diversified portfolio with appropriate asset allocations.

Thanks, I will look into this.

I am always a bit skeptical about all these funds though. Wouldn't you have to pay fees and are these extra fees worth it long-term?

I am just wondering whether these funds (with the fees) could really do better picking say, fixed income investments, better that yourself.

(this seems like a good time to reiterate that i'm a humble noob and certainly no professional financial advisor.)

it is true that investment products like TR funds and mutual funds carry fees. indeed, you are wise to pay attention to these fees as they are a key factor in predicting the success of an investment portfolio.

you could largely avoid these fees[1] by investing in individual stocks and bonds yourself, but to achieve the kind of diversification a broad mutual fund provides you would need to own a LOT of stuff. you can compensate for this by managing a portfolio of, say, 20-30 individual holdings. however, this can be a time-consuming activity (researching companies, tracking their business, monitoring competitors and market threats, etc.). further, this kind of investing is a lot riskier[2].

this is why i like low-cost passive index funds. you get a piece of a bunch of stocks and/or bonds at once, and no one is picking specific holdings -- they just follow some kind of formula (like "stock of all US companies" or "stock of all companies of a certain financial size") -- so the fees are generally quite low.

most TRs will just be a mix of different index funds, which is why i mention all this and why i recommend a TR until you learn enough to want to have finer-grained control.

[1] transaction fees with your brokerage will likely apply but if minimized these should have a negligible effect on a portfolio in the long term, especially compared to a consistent vig over the entire life of the portfolio as with a mutual fund.

[2] potentially more rewarding, of course.

Thanks, I guess what I should be asking is, is investing in just an index fund more of a play for someone who is young because over time you will do well. I guess older people would be more suited to dividend paying stocks but I imagine it is not as simple as that as everything carries a risk. Maybe I could break it down and invest a percentage in dividend paying stocks, bonds etc. And put a smaller portion aside for something higher risk.

there are index funds for a lot of things (including bonds, e.g. vbmfx) so the choice to use index funds has nothing to do with age or investment timeline.

the rule of thumb is to hold approximately your age in bonds. e.g. your 62 year old mother would have about 62% of her portfolio in bonds, leaving 38% in stocks. i would rather have that 38% allocated to broad indexes rather than trying to sort out dividend-paying stocks, "something higher risk" stocks, etc.

edit: another feature of TR accounts is that they automatically decrease stock and increase bonds as they approach their designated target date.

Thanks for the feedback. I will look into this.

Tyler speaks the truth. You dont have to continually be so humble t_c. Target retirement fund from vanguard my be perhaps the easiest and most rewarding investment solutions for individuals today.

I'm 25
Just got a 2011 IRA with fidelity(standard?). Zero clue what to invest it in

I currently own a 2br rental apartment fwiw

Want to do the highest EV thing possible , will be fine if it busts

Don't know anything about anything tho to take educated risk, so thinking just an S&P 500 index fund (spy)

Might make sense to invest in something that has an inverse relationship to the American economy as a way of diversifying is my only other thought

i recommend (drum roll) a target retirement fund. a much better diversified fund than s&p 500 while you learn more.

i don't think there's anything with a truly inverse relationship to the us economy. the global economy is strongly interdependent, as we saw when the real estate cluster**** slowed markets everywhere. however, it is definitely wise to hold non-US stock --
i personally hold a 50/50 split of us and non-us stocks.

fidelity's freedom funds do this as well, although with a much stronger weight toward us stocks:
http://personal.fidelity.com/product...nds.shtml.cvsr

I agree with Tyler, but if you are going to buy the S&P 500 only, then buy IVV. It's the iShares 500 ETF. At Fidelity, you can buy 30 iShares ETFs commission free (including IVV).

Well he wants highest EV, (noob question ) can he buy something On margin ?

I wouldn't do a target fund at all. alvl2 said he wants to do "the highest EV thing possible, will be fine if it busts". We're talking about, at the very least, a 34.5 year investment since this is an IRA. There is no reason to put him in a freedom fund that currently has 10% in bonds (if we're doing their most aggressive 2055) and will only move more into the category as time goes on.
I'd say start with close to 100% stock, with a good mix of small and mid caps (both growth and value, or "blends"). Maybe 60/40 domestic/international equity.

there's a lot of EV to be extracted from asset allocation or even individual stocks long before he starts worrying about options and margins and that kind of stuff.

oof,

i agree that his stated risk tolerance makes him a candidate for something more aggressive. i recommended the TR because of this: "Don't know anything about anything tho". i think a TR is a great way to get his money invested in something (and superior to 100% s&p 500) while he learns what he needs to learn to implement a more aggressive/complex/personalized strategy.