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Best no-income investments?
Old 10-11-2014, 07:21 AM   #1
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Best no-income investments?

To keep the highest health subsidies one should have low income, this can be a problem if someone has a decent amount of money. What is the best method of showing no current income, yet getting a decent return? The idea is to get to 65 to reap the income then.

Cash in mattress (Not a great return)
Physical Gold (Risky)
I-Bonds (Limited to $10,000 a year, too small)
Non dividend stocks (BRK-B set and forget?)
Land (Expensive with taxes)
Bitcoin (Risky)
Art (Not liquid)
Deferred Annuity (Inflexible, risky)

Any other ideas?
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Old 10-11-2014, 07:30 AM   #2
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Marijuana business, where legal.

All transactions are cash, in those businesses you can't even open a bank account to put it in. You run cash.

I have a friend who invested in one, he gets a FedEx package every month with his return on investment.

I am not sure how you go about investing in one.
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Old 10-11-2014, 09:10 AM   #3
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be interesting to know about marijuana investment. How are they taxed? is it legal?
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Old 10-11-2014, 09:14 AM   #4
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BRK-B looking at past. Who knows what future will bring.
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Old 10-11-2014, 09:51 AM   #5
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BRK-B looking at past. Who knows what future will bring.
I was just going to say that. We know Warren Buffet won't last forever but Apple seems to have done OK post- Steve Jobs. Our Berkshire-Hathaway just sits there and (mostly) appreciates. No dividends, and when we sell it will be at long-term capital gain rates. Bonus: we're 3 hours from Omaha and occasionally attend the Annual Meeting just for fun. Great way to get Justin Boots at a substantial discount!
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Old 10-11-2014, 10:09 AM   #6
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Well we know that something that emulates BRK will do great. So if you can find some stocks like Amex and Coke and Gillette. That is boring reliable stocks that grow 7-10 annually for decades then you will make killings....If you are patient.

Buy them and hold them like Buffet (forever). But this has two problems: it will generate dividend income and even bigger problem is to find Next Coke
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Old 10-11-2014, 10:15 AM   #7
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Don't many ETFs have the sweet advantage of being able to 'exchange' shares with large capital gains out to large investors who convert their ETF shares into the individual securities, thereby raising the effective cost basis of the ETF's shares, and greatly reducing any capital gain distributions?

Various Vanguard ETFs have yields that aren't enormous (maybe 1.8% or so). Most of those dividends are qualified, so you'll pay just 15% tax (20% if highest bracket) on a smallish yield, leaving most of your return hopefully in the form of capital gains at a later date.

Then there are MLPs - but each MLP is different, as some companies have different types of income that you share in each year on the K-1s, which would show some small partial taxable income (less than the distributions from an ETF).
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Old 10-12-2014, 12:41 PM   #8
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I'd try a total US or Global ETF/fund (itot is one) if you can deal with the dividends.

If not, try something like jke, jkh, and/or jkk, large, mid, and small cap growth ETF's. They have lower yields than value funds. They are about as tax efficient as you can get without getting fairly specialized or buying your own non-dividend growth stocks.
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Old 10-12-2014, 01:03 PM   #9
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Various Vanguard ETFs have yields that aren't enormous (maybe 1.8% or so). Most of those dividends are qualified, so you'll pay just 15% tax (20% if highest bracket) on a smallish yield, leaving most of your return hopefully in the form of capital gains at a later date.
Bogleheads wiki Tax-managed fund comparison - Bogleheads has a summary of various tax managed funds. They get down to about 1% dividend yield compared with 2% for S&P 500.

Personally I'd be very hesitant to do drastic shifts in my allocation to reduce dividends unless perhaps I was coming up against a very large subsidy cliff (i.e. I wouldn't do it for just a few k).
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Old 10-12-2014, 01:18 PM   #10
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So let me see if I have this right. You want to know the best way to invest your money so you can spend other peoples money until you reach 65 and then you will spend your money. Have I got that right?
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Old 10-12-2014, 01:44 PM   #11
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I am taking advantage of the legal framework to maximize my results. No different than taking steps to minimize taxes or increase benefits where possible.

I look at it as recovery of stolen property, since they have been stealing (taxing) me for 30 years I am totally justified in getting whatever I can back from them.
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Old 10-12-2014, 04:02 PM   #12
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If you have a small business legitimate busines expenses are deductible from your gross income, which may include items like your ISP cost, a home office, business phone, business travel and the unsubsidized portion of health insurance premiums. Many types of retirement contributions can reduce your MAGI and tax defer ongoing income.

Health savings accounts are deductible. Complete list here:
http://laborcenter.berkeley.edu/pdf/..._summary13.pdf

Most travel rewards are not considered taxable income.

Updating with sweat equity and flipping your personal residence usually is untaxed income, but it can be taxable. Tax implications here:
https://turbotax.intuit.com/tax-tool...tml#reportsale

I bonds are limited per unique tax id. Businesses can have their own tax numbers as can trusts, spouse if you are married, etc. plus 5K on tax returns.
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Old 10-12-2014, 05:19 PM   #13
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Originally Posted by MooreBonds View Post
Various Vanguard ETFs have yields that aren't enormous (maybe 1.8% or so). Most of those dividends are qualified, so you'll pay just 15% tax (20% if highest bracket) on a smallish yield, leaving most of your return hopefully in the form of capital gains at a later date.
This is the tactic I am trying, but for a different reason. We are moving back to the UK in a couple of years and Vanguard ETF's are treated by HMRC as regular funds, unlike US mutual funds which are treated as PFIC's. Dividends from stock etf's and any capital gains from sales of etf's are each tax free to the tune of ~$17k each, then taxed at 15% above that. I'll still be paying 15% in the US, as US citizens have to file taxes regardless of where they live, but I'll be avoiding additional taxes due to owning PFIC's.

Consequently my regular MF's (ie Wellesley and Wellington) are in my ROTH and IRA since they receive the same treatment as in the US. (ie IRA's are tax deferred and ROTH's are tax free)
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Old 10-12-2014, 05:33 PM   #14
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So let me see if I have this right. You want to know the best way to invest your money so you can spend other peoples money until you reach 65 and then you will spend your money. Have I got that right?
That's the name of the game, isn't it?
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Old 10-12-2014, 06:16 PM   #15
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That's the name of the game, isn't it?
The subsidies are technically tax credits. Why would it be okay to minimize taxes owed, but not maximize tax credits due? I have never seen a forum post here on how to maximize one's taxes owed, though I admit I don't read every thread, so maybe they are here and I just missed them.
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Old 10-12-2014, 07:01 PM   #16
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Originally Posted by jim584672 View Post
To keep the highest health subsidies one should have low income, this can be a problem if someone has a decent amount of money. What is the best method of showing no current income, yet getting a decent return? The idea is to get to 65 to reap the income then.

Cash in mattress (Not a great return)
Physical Gold (Risky)
I-Bonds (Limited to $10,000 a year, too small)
Non dividend stocks (BRK-B set and forget?)
Land (Expensive with taxes)
Bitcoin (Risky)
Art (Not liquid)
Deferred Annuity (Inflexible, risky)

Any other ideas?
I'd say a small cap index tracking mutual fund or ETF would give you growth over the long term and - last I checked - small cap index tracking securities didn't pay dividends.

-Jon
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Old 10-12-2014, 07:19 PM   #17
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be interesting to know about marijuana investment. How are they taxed? is it legal?
It is a legal Colorado dispensary, I am not sure about anything else...
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Old 10-12-2014, 10:58 PM   #18
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So let me see if I have this right. You want to know the best way to invest your money so you can spend other peoples money until you reach 65 and then you will spend your money. Have I got that right?
Him along with a lot of other people. There has never been a group too dumb to jump through some hoops to be on the receiving end of meaningful transfer payments. It is socially and psychologically debilitating, but is gives more power to politicians who have never been shy about accruing power.

Ha
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Old 10-12-2014, 11:19 PM   #19
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Originally Posted by Senator View Post
Marijuana business, where legal.

All transactions are cash, in those businesses you can't even open a bank account to put it in. You run cash.

I have a friend who invested in one, he gets a FedEx package every month with his return on investment.

I am not sure how you go about investing in one.

You have to report income and pay taxes, cash or no cash. This is tax evasion, not tax avoidance. The first is a crime, the second is perfectly legal. I hope you're kidding.


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Old 10-12-2014, 11:22 PM   #20
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Originally Posted by EastWest Gal View Post
You have to report income and pay taxes, cash or no cash. This is tax evasion, not tax avoidance. The first is a crime, the second is perfectly legal. I hope you're kidding.


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Maybe I misunderstood, but I thought the cash was explained by the fact that the dispensaries are having trouble opening bank accounts, not because they are trying to launder money?
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