Author Archives: Money Reasons

About Money Reasons

A offbeat personal finance blogger that comes from the tech world.

Selling Year End Stock Losses

by

This year I have a lot of realized financial gains!

401k History

 

To offset big gain years, I usually have some speculative stocks that haven’t done as well as I hoped that they would, and so this is the time that I like to sell them.  I use to procrastinate and sell these dog stocks closer to year-end (check out: Time To Sell Year End Capital Losses?), but this just create stress and increases the likely hood that I’ll forget about them in the marathon of the Christmas and New Year’s season rush.

The taking stock losses tax rule is you can declare the loss on your tax for up to $3,000 over any recognized gain offset that you might have.  So for example, if you had a huge gain in one stock and you sold it netting $12,000 in capital gain, but you also had a recognized losses in other stocks where you lost a total of $16,000, you can only claim $15,000 in losses on your income tax form this year.  That said, you can carry the left over $1,000 forward and take the loss against the current or future year(s’) income taxes.

From a personal perspective, I use to be embarrassed about selling my stock losses, and so I would hold onto them for years hoping they might come back.  And there is a small chance that they might, you never know…  Now I look forward to dropping these dogs.  I now view it as I played the market and these are the games that I lost.  In fact in some ways I’m very happy to get rid of these stocks now, and actually I now have less and less losers every year.

Another nice perk about selling losses is that you get to start the new year with a clean slate.  Consider the loss a learning experience and move one.  Over time hopefully you ability to pick more winning stocks will surface.  If not, then go with mutual funds or ETFs.

Want to read more?  Check out the article at Retire By 40‘s site called:  Sell Your Losers Before 2011 Ends!  It good to see others do similar strategies as I do!

Bests, and here’s a toast to a great 2012 stock market year (at least I hope),

MR

A Different Approach to Giving – Personal Charity

by

My Personal Charity

Money Gift

 

As Christmas grows near, many times (including this year) I don’t have an extra $1000 or even $100 to give to charity.  At this point in my life I don’t have enough  or make enough to give that hard-earned money away, especially after buying presents for others.  Still, I would like to help people in need out, especially near Christmas…  I could give to the Salvation Army (and actually I do), but I’ve been thinking that I would rather do something on a more personal level, and since I like dividends, I thought why not invest my money in some dividend stocks and use the dividend for charity!

Charity Funded By Stock Dividends

Using dividend stocks to fund charities could also serve as an unofficial emergency fund in case of a downturn in the economy or something horrible happen to me like the possibility that I would lose my job.  While it might not be a lot of money, every bit helps!

The best thing about giving money to a Charity (or Charities) with the dividend payments from dividend stocks is if the stock has a consistent history of increasing dividend payment, each year the payout from the dividend (minus the tax consequence) would increase!  So each year the payout would become more and more, not to mention that you buy more shares of the stock every year too!

Starting A Personal Charity, A Small Beginning

Okay, now let’s look at the details…  Let’s say that you were able to save $1,000 per year for the “Dividend Stocks for Charity” fund.  So is the dividend payout came to 4%, that would be $40 for the first year (I’m skipping the taxes here because the amount is so low).  There isn’t too much you can really do with $40, except:

  • Give the $40 to a few (or one) favorite servers (waitress, or similar) that you know that always makes you enjoy your time at the location they are working at!
  • Drop the money in a Salvation Army Bucket…
  • Anonymously mail some deserving child (or family) that is always nice but may be having trouble financially.  Perhaps address the mailed gift from Santa, or “A Friend That Knows the Good You Do”, or something similar…
  • The Salvation Army’s kettle is always a good option for charity, if you are too busy.
  • Perhaps there is a community project that is accepting donations, or a specialized community group that would benefit…
  • Or you could go out and buy toys for the “Toys for Tots” program.

The thing is that you can do anything your want with the money!  You wouldn’t be restricted to just organized charities!  In fact 100% of your personal Charity fund could go directly to the cause that you want to give it too.  With large business charities, a lot of the money goes to support the running of the business of the Charity.  Sometimes more than half the money you would contribute wouldn’t even make it to the cause that needs the charity.

A Personal Charity just Feels Better!

For me personally, I prefer to have feedback and accountability for the money that I give away to charity!  With my own personal charity, I’m able to see the results of the money that I gave away.  If I decided to buy a child a bike, I can roll the bike to the doorstep where the child lives, that way I know the child received the gift, and I might even be able to see such a child riding that bike someday.  I’m sure that would be an awesome feeling!

Of course we would still contribute the our regular “business organized” charities also…

Here’s wishing you the best of holidays this year!

MR

Dividends Paying Expenses – My Thoughts

by

A friend at work asked why am I working so hard to saving dividends to pay for my lunch expenses.

Cross-over point to the positive

He was actually referencing the fact that I don’t go out as much because of my experiment called: Lunch Dividend Experiment.  He thought it was a risky move because what happens if the stock stops paying dividends or goes belly up and I lose my entire investment in that company.

Well, my friend is only seeing part of the equation.  The part he forgot about was that if I paid for expenses with my earned income, my money is gone after I pay for the expense.  However, with stocks that pay dividends, I have the opportunity to keep my initial investment, only spending the dividend portion.  It’s true that such stocks won’t increase in value as fast that way, but the idea is someday that I will increase my investment in that stock too, once the dividend payout is more than what is required to pay for the expense and taxes.

At the very least, I’m not spending my earned income, never to see that money again!

That said, I won’t be able to use dividends to pay my mortgage (if I still had one), but everything else is fair game!

Almost all of my dividends are overloaded in purpose.  By this I mean that I’ll use my dividends for a want, but if something happens, I’ll switch it to cover a need. For example, I’m working on building up my dividend payouts so that they can cover future vacations, or at least help pay for vacations, but if some disaster happens like I’m unemployed, that dividend stream will go to other more important things such as food or paying my real estate taxes.

That the beauty of dividend goals!  Just because they are ideally focused on one goal, doesn’t mean that they can’t be switch to a new high priority goal if the need arises.

Bests,

MR

Too Error Is To Learn

by

Always try to learn from your errors!

I was watching Morning Express with Robin Meade, when a new clip came on about a man that shot mistletoe out of a tree in a parking lot.  Obviously he was arrested.  When they went on to interview him, apparently this had happened before when he shot mistletoe out of his neighbor’s tree the previous year.

Personally, if I were to get arrested for shooting mistletoe out of my neighbor’s tree, I certainly wouldn’t take my shotgun to a parking lot and try to shoot the mistletoe out of the tree in a public location!  When they showed the man talking on TV, it was pretty obvious that he wasn’t the most clever individual.

All of this leads up to the fact that if you error, you must learn from the experience or else you will continually lose and never get ahead personally or financially.  Most of us can’t play a perfect game in life and the stock market, even the investing legend Warren Buffett hasn’t played a perfect game!

I remember the first stock that I bought that went bust (or belly up)!  It’s was a small Canadian company call “New York Seltzer”, and while the company was questionable since part of their name was New York (even though they were based in Canada), their product was great!  So as a young teen with big dreams, I plopped down an even $200 in a company that I thought would expand and grow like crazy.  I was very, very wrong.

From my “New York” seltzer experience, I learned at a young age that sometimes having a great product isn’t enough.  Those that run the company are critical, and if you don’t have an “A+ team” running the company, then even with a great product, you can still lose!  Later, there was a company called SyQuest that also made a superior product (at the time) called Sparq drives.  I bought their product and loved it and considered buying stock in the company.  But then I looked at how it was run and the way they advertised their product and I decided not to take the leap!  This turned out to be a good move.

The point is that we all make mistakes, it’s part of being human, and life would be pretty dull if everybody was perfect.  But continually making the same or similar mistake is something to be avoided!  The man mentioned above should have learned from his mistakes last year, and if you aren’t sure about something, then Google it.  While Google doesn’t guarantee that the answer is correct, most of the time it will be if you read a few articles.

When you make an big mistake, think about and learn what happened and take corrective actions so it doesn’t happen again.

What do you do when you make mistakes?

MR

P.S. I know my title looks weird, but “Too Error” is actually a play on words, the real words phrase is “To Err”, but I thought it would be funny to error on the title (lol)…