watsa_is_a_randian_hero

REITs seem like a much better yield/inflation-protected capital preservation option than large-cap stocks or bonds right now. IYR - reit index Also I wouldn't put someone that dependent upon income in a stock portfolio that concentrated. is this a taxable account? If so you need a pre-tax check of maybe 7k/quarter...

Yes; but I have one set up with HSA Bank, where you can open a sub-account with Ameritrade and trade individual stocks/bonds/options just like an IRA. I've now got about $25k in my HSA...I max out the contribution each year, and then pay all medical expenses out of pocket and do not withdrawal anything from HSA. If you run the numbers it is the best tax-advantaged account available. To answer someone else's question - there is a difference between rollover and direct transfer; for HSA's you can do as many direct transfers as you want in a year. My employer generally contributes $200/quarter to a Aetna/Chase HSA. I'll make the remainder of the annual max contribution at the beginning of the year to my HSA Bank account (already done for 2014). Then I'll transfer the $ from the Aetna/Chase employer HSA over every now and then using a direct transfer. Definitely something I recommend doing.

I've done valuation consulting work for some extremely HNWI setting these up...but they were setting them up with hundreds of millions of dollars in each grat. The tax benefits are amazing, especially in this low interest rate environment. That said, I'm not sure how much the admin costs are and whether it would make sense for someone with something like $1 million vs 100's of millions. edit: also, this is something you don't even need to have children to do...you can name unborn children as beneficiary, and then reclaim whole thing for yourself if you don't end up having kids. Thats what Zuck did, at least from what I read.

I've looked into this myself over the last year but haven't pulled the trigger. I have an IRA at Self Directed IRA Services, but this was set up just to invest in a Lending Club account and they facilitated the transaction. I'd echo what was said earlier though, from what I've read the IRS frowns upon checkbook ira's and you run a risk of disallowing ira status if not done correctly (which is why I haven't done anything besides lending club). I've read you need to avoid self-dealing (ie, investing in a company at which you are the CEO); then again, I've also read Zuckerberg bought some of his facebook shares in a roth. There are also some strange rules where if leverage is used in certain ways, you have to pay the equivalent tax on the interest, or something along those lines. What I'd love to do is have a checkbook ira that I could have the flexibility of a normal portfolio margin brokerage account, the flexibility of investing in real estate with a mortgage, etc. However, I lack enough of an understanding to pull the trigger.

do we know that its not a roth? Also, I forget the exact numbers, but its disclosed as a range in campaign disclosures, I think 100mm was the low end (we're splitting hairs here though). Finally, I'm sure his assets outside the ira are not insignificant.

Ericopoly - I hope you don't take this the wrong way - but I'm really surprised you haven't heard of this before. I say I'm surprised because I view you as the thought leadership on this board when it comes to tax avoidance and investment schemes. I say don't take it the wrong way, because I've thoroughly enjoyed and benefited from the schemes you've proposed in the past! Tax avoidance schemes (legal ones) might be a close 2nd favorite topic of mine, behind stock research. If you haven't already read about it, you should read about the methods Mitt Romney and Bain employed that resulted in him having $100mm+ IRA balances. The practice is questionable, because the assets were purchased at (arguably) undervalued prices). He was doing this back in the 90's though; not sure if the IRS was paying as close of attention back then.

ALGN CAMP GNI OZRK QUMO SHW TLT TVIX UG UVXY WHX Equal Weighted

Ericopoly - I like most of your posts, but not this one. By your logic here we should just have 1 bank and no competition. The bank wouldn't need to "waste" money on advertising then, and the FDIC would have no purpose! This is the flawed logic of Marx. The TBTF banks suffer from an institutional imperative. The regulatory barriers to entry combined with the competitive advantage of marketing yourself as TBTF creates a void of competition and lines the pockets of management. Personally I think a better solution to government backstops on TBTF would be to have assessable shares, or boardmember liability, or perhaps just a separate share class that is assessable, or private deposit insurance (so risky banks are penalized with higher premiums). I would personally not invest TBTF banks in this environment. The administration has been extracting "justice" in the form of headline settlements weekly. What sense does it make to punish shareholders (who have already been punished with losses) with penalties for management's misdoings? What sense does it make to own shares in most of these banks at this price level? Many midsize banks offer great value...I've mentioned FCBN as one of my largest holdings before. This is an $8 billion family-run very conservative bank with a history of 15%+ average returns on TBV trading at a cheaper TBV multiple (0.8x) than all of the TBTF banks. Albeit, it is somewhat illiquid, but its larger sister ($20-billion) FCNCA trades at 1.1x has more liquidity and has the same board and controlling shareholders and a similar track record.

muscleman, morningstar...you guys are missing the point. This issue cannot possibly be a problem for taxable accounts (because withholding is not improper); and any US credit to offset is impossible to get for taxes withheld within the ira.

I view it as IB's value if they are the only broker (out of a half dozen I have experience with) that is withholding on Canadian dividends incorrectly. I'll take my business elsewhere. Not worth my time to battle CRA...much easier to just keep another ira account at another broker for purposes of of these types of trades.

Both. they are both the same stock; Common Subordinate Voting Shares in Fairfax. You can buy the shares at IB through US FRFHF and sell them in canada through FFH.to (I've done that)...its the same paper. It makes no difference to IB in terms of withholding treatment which exchange you purchased the stock from. edit: ironically though, though it is the same paper, it does make a difference in how much margin they will allow in your account. They will lend more against FFH.to then FRFHF.

I guess this is the part that I think is really weird. Why would they choose a practice that results in improper withholding rates? I just followed up with prior response with this as well: I guess this is the issue I have: you responded "In the case of the foreign dividend processing and withholding, brokers do have various methods to choose. Whatever practice is elected, the customers feel the effects either in broker pricing or a preferential non-resident tax withholding rate." What I don't understand is why IB is deliberately using a business practice that they know results in improper tax withholding in IRAs? This doesn't seem like a matter of choosing among multiple appropriate optional business practices as your response implies. It seems to me that if improper tax withholding is a result of the business practice, then that business practice is inappropriate and IB should correct it. Note that I have not had this issue with any other broker in my experience; IB is the outlier.

I replied with: "That is unfortunate IB is claiming there is nothing further they can do on this issue. I've always thought of IB as the best broker in many categories. However, the costs of paying unnecessary taxes in an IRA account is too significant of a cost to ignore; this leaves me no choice but continue to avoid trading foreign dividend-paying stocks within an IRA at IB and use other brokers for that service." Does anyone else think IB's handling of this and their response is really weird? Does anyone think there is a chance they are lying and this actually was a mistake on their end to withhold foreign taxes incorrectly within IRAs?

Received this reply: Dear Mr. XXX, While we do value our relationship with you, I do understand your conclusion. Traders should consider all factors with regard to transactions. In this case, the favorable withholding rate may not be available for your investment. No firm can truly explain why or how other firms process some transactions. In the case of the foreign dividend processing and withholding, brokers do have various methods to choose. Whatever practice is elected, the customers feel the effects either in broker pricing or a preferential non-resident tax withholding rate. Since dividend processing varies from one firm to the next, particularly among non-US firms and/or US firms with non-US subsidiaries, there are other factors which may allow a treaty rate to be applied. Some firms are able to request treaty waivers and do process a significant amount of manual processing. On another side, some brokers do not disclose their beneficial owners or rely on a heavy amount of manual processing. IB relies on electronic processing for many transactions, including dividend processing. Some of our attempts to request treaty rates for customers electronically could not be completed due to requirements for a manual format. I hope that sheds some light on a very complex and varied system of dividend processing. We do our best to obtain the best overall services for our traders. Regards, Kawone H Interactive Brokers LLC

thanks muscleman - I actually have been going back and forth with IB - I got a reply from the same Kawone rep that was very similar. I responded though saying if this was an instance where the depository withheld (and not IB) then why does the dividend on FRFHF come through tax-free to my managed IRA accounts at other brokers (etrade, ameritrade, etc)? They have not yet responded to my last question. At this point, the only solution I see is to avoid trading canadian stocks in an IB IRA.

I have a physical stock cert I was issued this year. It is a penny stock. Its worth between $500-$1000 depending on the day. I wanted to donate the cert because it is a pain in the @ss/costly to get deposited in electronic form to actually sell, and I thought a large charity might have larger resources to more cheaply/effectively liquidate the shares. Long story short, I've tried a few charities; nobody wants the shares. The ticker is URHG...if anyone has a favorite charity and can verify they'll take the shares, then I pledge I'll donate them to the charity of your choice. PM me if interested.

Think about it this way; a hedge fund legally is structured as an LP or a LLC usually. It is a business. The business has management expenses (fees paid to management company), as well as other fees, such as its own audit, or its own legal expenses, etc. These are not expenses that benefit the management company; they are expenses directly related to the business of the fund, and for the benefit of the fund. I have not seen an "expense ratio" for a hedge fund advertised in the same sense as a mutual fund; but for a mutual fund your equation above would be correct. A quick google search yielded the annual report for the vanguard 500 index fund...the annual report is just like the annual report of a company; it has an income statement. Revenue consists of investment income; Expenses consist of (1) fees to vanguard for management, admin, marketing, and distribution and (2) fund expenses such as custodian fees, auditing fees, shareholder reporting fees, trustee fees, etc.

I currently manage money in separate accounts, almost 2mm right now. I've thought in order to do that full-time, I would need 10mm of outside money, or 3mm of my own money, or some combination thereof. My hurdle for personal assets may be larger than others as I am very risk-adverse and fear of failure drives me to want a large nest egg before doing this full-time with a family to support. Something I thought I would add to this thread, as I don't believe it has been mentioned. Expenses such as auditor, admin, legal etc are typically considered "fund expenses" and paid out of the fund. They would not reduce your fees. That said, many small managers voluntarily pay for these expenses out of the management company so as to avoid burdening their fund with expenses, reducing their performance track record. That said, if the expense is a legitimate fund expenses, it can be paid out of the fund, and larger funds do this all the time.

I would say its relative, not subjective. Someone looking for 2% returns would likely find it unattractive relative to the other investments available that could earn 2%+ returns, because of the relative levels of risk. I voted 2, because relative to all other investment options out there from both a risk and potential return perspective, I would find a US market-weighted equity benchmark (such as S&P or wilshire) to be somewhat unattractive at these levels.

Do you mean the dividend tax withholding or the capital gain tax withholding? Wow, I didn't know that they withhold foreign tax in IRA accounts! :o I was thinking about creating an IRA in IB, because they can trade international stocks nicely, but now I have to think twice. I'm referring to dividends. Many jurisdictions all brokers (not just IB) will withhold taxes in. I thought Canada/US had some sort of tax treaty though. For now I just hold almost all foreign stocks in my taxable account, not my IRA. However, I want to figure this canada issue out with certainty.

I have $100 and $95 LEAPS I bought 2 years ago, expiring in 2 months. I assumed they would expire worthless...they actually have a chance now of making money.

really...nothin? bumping...

Any tax experts on here? Any knowledge of whether foreign taxes are supposed to be withheld on Canadian ADR's within an IRA? I believe Interactive Brokers has been improperly withholding taxes on Canadian ADR's held within IRAs. Shares held within my etrade and ameritrade accounts have never been withheld on, but IB has been withholding on my Canadian ADRs. I have read different things on different websites; it appears it may depend on the corporate structure. That said, FRFHF was not withheld on at Etrade while FFH.TO was withheld on at IB. I'd like to bring this up to IB, but like I said, I've read different things on different websites, and would appreciate the advice of anyone with tax expertise that knows the answer to this question definitively.

Well, there is a BIG difference in the situation you described...The doctor is likely to be able to pay that debt off. This poor woman is not likely to make any significant progress on her loans. She is not even paying the INTEREST on them now. She is most likely NOT going to be able to earn her way out as an attorney. As time progresses, she MIGHT be able to make more than $25k a year, but the odds are stacked against her. Every six months there are more attorneys entering the market. This jurisdiction also will changes made to the appointment system in the new year. The changes will result in the same amount of work being handed out to more attorneys. Thus, her work level might eventually go to one day a week average (for appointments). The only way out of her debt is if she maybe got into a different field. Unfortunately, her education is law and journalism, not medicine or business... I have to disagree to an extent. Right now the doctor is not covering covering the interest charges each year. They don't make 200k right off the bat. They have to get through fellowhips and what not that really pays crap. Doctors always flood to the field that is in need with doctors thus pushing down the payscale. I know many doctors who have had very large signing bonuses. I know 2 who are in primary care who had their loans completely paid off by the hospital system they signed on with.

maybe he is a shape-shifting reptilian.