Readers have been requesting more information on my investments and I love investing. I’m down. I want to share my investment decisions with you.
Here is my most recent investment decision. I think it will yield positive results in the long run. This weekI invested $20,000 more in AMZN in my SEP-IRA .
As you probably know, I am a huge believer in index funds and 80% of my Millennial Money portfolio is invested in funds that track the domestic and international stock indexes. Occasionally, I buy individual stocks when I think they are a good value.
If you’re new or have just started investing then I strongly recommend focusing on index funds, but as your portfolio grows, it can make sense to take 5-20% of your portfolio and invest in individual stocks. Even though I don’t recommend day-trading, I’ve recently started exploring the nuances of more sophisticated trading platforms. I want to maximize my returns without taking on too much risk. I want to know what crazy things are happening on traders screens. When markets are volatile, the trading floor is very intense.
I have a new living room. I am going to decorate and make my own space. Isn’t it pretty? j/k
But be careful – it’s easy to make money investing in individual stocks. I am confident that AMZN will continue to dominate e-commerce, cloud storage, and it’s rapid expansion into shipping/logistics are exciting. Amazon’s commitment to customer experience and innovation will ensure its future success. Even though the stock is trading above $800 and has increased in value significantly over the past year, this hold it for the long term play in my IRA. I believe that the stock will continue to appreciate in value over time, making it an even better investment for retirement.
My Investing Tax Advantaged and Non-Tax Advantages Accounts
Here is a quick background on my multiple investing accounts:
I contribute via profit sharing to my company’s 401(k) and max out at $18K every year. I’m thankful for the chance to contribute to my retirement savings, and I’m confident that it will pay off in the long run. I was able to make a contribution to my 401(k) last year. I look forward to increasing my contributions this year and am proud of my financial goal. The mix is mostly market index funds. The mix is designed to give a balanced approach to investing.
Traditional IRA : This account is solely used for the purpose of doing a I contribute a certain amount of money every year. I don’t have a balance in my traditional IRA.
I andlt;3 my IRA. It’s a great way to save for retirement and avoid taxes. I maxed it out when I was 25. I use it to make sure I’m not overspending and stay on top of my finances. All index funds. I can use a back door conversion from my traditional IRA to continue to contribute even though my income is higher than the max. There is a chance for me to maximize my retirement savings. I have to pay tax on the conversion because of the balance in my SEP-IRA. I’m thankful that I’m able to take advantage of the tax-free benefits of converting my SEP-IRA to a Roth IRA.
I have a number of stocks in my account. I use a brokerage account to make wise investment decisions with my portfolio. I have made money in most of the stocks, but once lost $3,000 trying to day-trade. I no longer try to do any day-trading and plan on keeping all of these stocks in my portfolio for the foreseeable future.
SEP IRA : Every year I put money into my IRA from my personal projects. Before making any major decisions about my SEP IRA, I make sure to consult a financial advisor. An SEP IRA can be used to administer a self-employed or small company plan. It has the same advantages as a traditional IRA, such as tax-deferred earnings and potential tax savings. 25% of net-profit or up to $53,000 is the max contribution rate. You have to stay within the limits set by the government to avoid penalties.
I contributed 25% of my earnings to my IRA in 2016 because I had a good year. You want to minimize your tax burden if you have side income from consulting or a website. It’s important to keep in mind that there are many different tax strategies available, and that a qualified tax expert can help you determine which one is best for your situation. Contributions are tax deductible. Donations to this organization help to make a difference.
“Minimizing your tax burden is essential to building wealth.”
Finding any and every way to minimize my tax burden is one of the keys to building wealth for me. I take advantage of any tax breaks I am eligible for. My IRA is definitely in that pursuit.
Benefits of Trading Stocks in an IRA
While I have always invested in index funds in my SEP IRA, over the past few months I have been considering using my SEP IRA to also trade stocks, with a focus on building a dividend growth portfolio, as well as testing my own individual strategies. I plan on taking a more measured approach, starting small and learning as I go.
The primary and most attractive benefits of investing in stock in my IRA:
1. No reporting of capital gains (this is a really nice feature especially if you are going to be doing a lot of trading
2. No worry about taxes until you take out the money
3. Tax free growth on re-invested dividends
One complicating factor is when you invest in individual stocks. The total growth of your holdings in the SEP IRA will be taxed at your income tax rate when you withdraw the money in the future. The SEP IRA offers tax benefits now, as contributions are deductible from taxes in the current year.
Critics of investing in individual stocks in an IRA point to the fact that capital gains tax is lower than your income tax level, so you lose that long term capital gains tax advantage in an IRA. Individual stocks can be hard to manage in an IRA.
It is difficult to know what tax rates will be in the future, so it is beneficial for me to push the tax burden into the future on some of my stock investments. Making tax-advantaged investments today can help reduce my tax burden in the future. I do everything I can to reduce my income and gains. I look for tax credits and deductions to reduce my income.
Many people think that capital gains taxes will increase in the future so that the advantage will erode. We don’t know what capital gains taxes will be next year. It is important to be aware of any changes that may affect capital gains taxes in the future. I don’t think it will stay low. I’m going to make sure my expenses stay low, just in case.
Why I am Buying Amazon Stock
When it was $298 a share, I bought AMZN. I’m glad I made the decision to keep the stock. Over the past 3 years, I have bought AMZN a few times, most recently in February 2016 at around $511. I am happy with my returns so far and plan to invest more in the future. I think this stock has significant long term growth potential and I plan on continuing to invest in the company.
They have continued to dominate the game. The way people shop and think about online retail has changed.
According to Forbes, “A recent report by the Institute for Local Self-Reliance (ISLR) claims that roughly half of all U.S. households are subscribed to Amazon Prime, half of all online shopping searches start directly on Amazon, and Amazon captures nearly one in every two dollars that Americans spend online.”
That’s crazy. Amazon has become such an institution that they have become the definition of online shopping, which is still in its infancy. The industry of online shopping is only going to continue to grow as other online retailers follow in the footsteps of Amazon. Amazon is growing their other lines of business, specifically their cloud storage and new logistics offerings. Amazon aims to provide customers with a more comprehensive suite of products and services by investing heavily in these new services. Eventually, I am confident they will also give traditional shippers like UPS, FedEx, and the Post Office strong competition with their own shipping network – they have already leased 40 planes and plan to hire over 100,000 new employees in 2017.
Who can forget about the delivery drones? Consumers can now get their packages delivered in record time thanks to the delivery drones. Amazon made its first delivery by drone in the UK in December. The package was delivered to a customer in Cambridge. Although it is not legal in the US, it is an exciting development in the future of delivery. Many companies are testing out drones in other countries. Who doesn’t want to get their coffee delivered in 13 minutes? I will invest in that. I think it will be a good decision.