Question about buying/selling securities

[myself]

If you have monies in a traditional IRA, and you buy and sell securities within that account (not talking about buying on margin or anything like that).
Are there any rules regarding buying/selling shares in a short timeframe?
And as long as monies are withdrawn from the IRA, they aren't taxable are they? Thinking in terms of capital gains or that type of thing.

I know that you can do it, and I believe I've also heard that you can buy/sell the same shares within a 30 day window and it appears as though you never sold the security.

 

[growing_older]

Inside an IRA, there are no wash sale rules. But then, there are also no capital loss deductions, either. The specific investment you hold may impose restrictions, for example some mutual funds limit short term trading, but that has nothing to do with IRA rules. Can you be more specific about what your concerns are? It makes no difference if you earn dividends or capital gains inside an IRA, they are all taxed the same (or not if it is a Roth) when they are withdrawn.

 

[myself]

Inside an IRA, there are no wash sale rules. But then, there are also no capital loss deductions, either. The specific investment you hold may impose restrictions, for example some mutual funds limit short term trading, but that has nothing to do with IRA rules. Can you be more specific about what your concerns are? It makes no difference if you earn dividends or capital gains inside an IRA, they are all taxed the same (or not if it is a Roth) when they are withdrawn.

Well, I was mostly concerned about if it is acceptable to buy/sell too much (paying all necessary costs along the way of course inside the IRA). I've been doing a lot of short sales (well short as in buying low and selling higher within the same month). This is in an effort to increase my holdings by the equivalent of 10%+/yr. So far, I did achieved that for 3 months successfully, but I'm currently down about 1% this month.
And it sometimes includes purchasing individual stocks on a Wednesday, and selling them by Friday, once I hit my target.

I'm glad that the capital gains/loss doesn't affect me outside of the IRA.
All this because I'm having the early retirement bug starting to nip me in the butt.

 

[CyclingInvestor]

Be careful if you trade the same securities within your IRA as outside. IRA transactions can turn deductible capital losses in your non-IRA account into wash sales.


Can IRA Transactions Trigger The Wash-Sale Rule?

 

[growing_older]

If you are asking if you can make wonderful returns by short term trading (day trading) inside your IRA, the same reasons this is very very unlikely to be successful in a taxable account also apply inside of an IRA.

 

[Nords]

Well, I was mostly concerned about if it is acceptable to buy/sell too much (paying all necessary costs along the way of course inside the IRA).

The short answer is "No". There's no correlation between more frequent trading and beating the benchmark.

However there's a pretty strong correlation between more frequent trading and higher expenses, which tends to make it that much harder to beat the benchmark.

Fidelity will let you hypertrade some of their ETFs for free anytime just because they still get a little piece of each transaction on the buy/sell spread and other fees. You don't see it because you're not paying a commission, but you're still paying for it.

As for hypertrading your way to ER'ing happily ever after, you might want to browse Dixonge's posts in this thread:
http://www.early-retirement.org/forums/f30/insane-emergency-re-strategy-40682.html

 

[FIRE'd@51]

As for hypertrading your way to ER'ing happily ever after, you might want to browse Dixonge's posts in this thread:
http://www.early-retirement.org/forums/f30/insane-emergency-re-strategy-40682.html

The thread you are linking has absolutely nothing to do with hyper-trading. Dixonge's strategy was to sell credit spreads every month. Dixonge may not have understood the risks he was taking, but it was not hyper-trading that caused his demise.

 

[LOL!]

Without any trading whatsoever, you should already be up about 10% for the year. At least that's what the stock market averages have done.

One of the problems with trading is that you need to keep track of what would've happened if you did not trade so much.

Some YTD returns:
Large cap index is up 7.3%,
REIT index: +10%
Mid/Small Index: 8.6%
... and so on.

Don't fool yourself myself.

 

[myself]

Without any trading whatsoever, you should already be up about 10% for the year. At least that's what the stock market averages have done.

One of the problems with trading is that you need to keep track of what would've happened if you did not trade so much.

Some YTD returns:
Large cap index is up 7.3%,
REIT index: +10%
Mid/Small Index: 8.6%
... and so on.

Don't fool yourself myself.

You're presumption is that I owned index funds.
The particular IRA that I have these monies in, had at one time (at the beginning of the year), 100 shares of BRKB and some extra cash. If you did a YTD on that particular stock, you would see that it had a -0.57% for the year. If I would have held that, I'd be in a lot worse shape than I am now. Doing some trading (literally about 4 times in the last 3 months ... which wasn't exactly hyper-trading), I've managed to increase the money in the account by 3.45% in that time.

 

[myself]

The short answer is "No". There's no correlation between more frequent trading and beating the benchmark.

However there's a pretty strong correlation between more frequent trading and higher expenses, which tends to make it that much harder to beat the benchmark.

Fidelity will let you hypertrade some of their ETFs for free anytime just because they still get a little piece of each transaction on the buy/sell spread and other fees. You don't see it because you're not paying a commission, but you're still paying for it.

As for hypertrading your way to ER'ing happily ever after, you might want to browse Dixonge's posts in this thread:
http://www.early-retirement.org/forums/f30/insane-emergency-re-strategy-40682.html

Thanks for that Nords!
I happen to have this account with Fidelity, but I didn't really want to hit the ETFs just yet.
Don't worry, I don't have any thoughts like I can get ER'ing happily every after within the next 3-5 years. But the bug is definitely biting. More so, I think I want to semi-retire, and do somethings that I enjoy more. I have some safety now in my position now, but I want to do a little CYA just in case, since we only have a single income.

 

[Nords]

The thread you are linking has absolutely nothing to do with hyper-trading. Dixonge's strategy was to sell credit spreads every month. Dixonge may not have understood the risks he was taking, but it was not hyper-trading that caused his demise.

Well, I can see how my phrasing the situation would have led to that conclusion, but the point I'd intended to make was that the OP is contemplating a get-rich-quick scheme that's likely to achieve the same results as Dixonge.

Although they'd probably both pay a ton of cash in trading commissions.

And perhaps you can appreciate the irony of saying that "... every month" is not the same as "hypertrading". From my perspective of having owned some shares for over a decade, it's at least 120x as fast as I prefer to trade. Seems pretty hyper to me.

 

[myself]

Well, I can see how my phrasing the situation would have led to that conclusion, but the point I'd intended to make was that the OP is contemplating a get-rich-quick scheme that's likely to achieve the same results as Dixonge.

Although they'd probably both pay a ton of cash in trading commissions.

And perhaps you can appreciate the irony of saying that "... every month" is not the same as "hypertrading". From my perspective of having owned some shares for over a decade, it's at least 120x as fast as I prefer to trade. Seems pretty hyper to me.

I can't say it's a get-rich-quick scheme, as it seemed that Dixonge was looking for 80%/yr, whereas I'd be happy enough to increase it by 10-15%/yr. My trading costs are about $7.95/trade, and my increases were after subtracting those commissions out. If my increases don't count after paying the commmissions, it's rather useless to me.
After all, if I made 20% in a year (yeah, like that would happen), and the commissions I paid out were 19% I think I'd quit almost immediately.
And I believe that once I have gained 8-10% for a few years, I will most likely lower the expectations a little.

Caveat: 120x faster than you is hyper trading I would suppose.

 

[Nords]

Caveat: 120x faster than you is hyper trading I would suppose.

The more learning & experience I get, the less I trade.

My investing temperament tends toward "lazy": value investing and dividend stocks. It's even better if I can find assets meeting both criteria.

 

[myself]

The more learning & experience I get, the less I trade.

My investing temperament tends toward "lazy": value investing and dividend stocks. It's even better if I can find assets meeting both criteria.

I'm starting down that path. Although, when I've done the B&H strategy, it seems that the result is almost a net of 2%/yr.
I bought some LINE and was considering KMP too because of their dividends.

And I didn't have anything extra to invest in BRKB when it hit it's low point about 12 months ago, when I wanted to pick it up for $71/shr. I already had 100 shared (thanks to being in a little before the 50:1 split).

And that's one area that I definitely need to change ... not diverting enough funds to the retirement account to start with.

 

[LOL!]

You're presumption is that I owned index funds.

I made no such presumption. I will presume that you will likely not do any better than index funds selected for the same risk level that you are using.

For example, if you invest in large company stocks (BRKB), then you will likely the long haul no matter how much trading you end up doing do no better than a large-cap US index fund. Or if you like to invest in emerging markets small cap stocks, you will do no better than an emerging markets small cap fund. Or if you like to invest in bonds, you will do no better than a bond index fund.

You would not offend me if you proved me wrong. Good luck!