The tax advantage of mortgage interest is bullshit….

"Tax advantages of housing
Another advantage of owning a home is that the government allows homeowners to deduct the interest on their mortgage from their reported income when filing taxes. This is just one of the many tax-advantaged ways you can keep more of your money.”

I read this quote all the time and it’s just stupid. For every $10,000 in mortgage interest you pay you save approximately $3,000 in taxes. You’re throwing away $7,000 to save $3,000. It’s stupid. It’s just a lie banks tell you to get nearly $1,000,000 from you for your $500,000 house. But hey, you save some taxes, so it’s ok.

Invest in peace…

"…many people assume buying a house is a sound investment strategy. The reality is that over the long term, houses do not return much above inflation, while the stock market has soundly beaten inflation over long periods of time. Yale economist Robert Shiller has collected home price data in the U.S. as far back as 1890. On an inflation-adjusted level, home prices have not risen significantly, while the stock market has consistently beaten inflation. For most people, buying a home is not the best way to increase your wealth."

Renting vs. Buying a Home: Comparing the Monthly Costs

Great article from www.biggerpockets.com that couldn’t be more true. Stop wasting your money on stupid shit and save it and, believe it or not, you will become rich! Crazy, I know.

Invest in peace…

Follow Up #2 on Tim Hortons, I bought Apple…

So, I took $10,000 of the cash I took out of Tim Hortons (THI) and I bought 97 more shares of Apple today for $102.37.  So, without investing any more money, I just flipped my gains in Tim Hortons for 97 shares of Apple, adding to my, I have quite a few more shares than you, holding of Apple that I already have.  (And I have $2xxx cash left from my THI sale.)

My guess is Apple will be near $150 in February, so, potentially, I will have flipped that $10,000 into $14,565+$2xxx cash.  File this in the Claim Chowder folder and come back in February to see if I was right.  

Then we will talk about how Dave Ramsey is full of crap over his 12% gain in the stock market.  Oh wait, he’s not wrong.  I’m up 13.97% right now, not counting all of the gains I already took out and not counting my dividends.

Invest in peace…

Tim Hortons Trade, continued…

BTW, I forgot to mention, if I had held Tim Hortons for over a year and made it a long-term capital gain, it would have been in a 15% taxable bracket and my ultimate tax bill would have been only 5% of all the cash I took out of my position.

Invest in peace…

Here is a rare glimpse into an actual trade of mine and how I avoid taxes.

On July 14th I bought 901 shares of Tim Hortons (THI) for $55.48 a share  for a total of $49,987.48. (Don’t buy based on number of shares, buy based on the amount of cash you’re willing to invest.  In this case, $50,000)

On August 26th I sold 155 shares at $81.36 for a total of $12,601.80.  Now, most people would think I am now taxed on $12,601.80, but this is wrong.  I just cashed out that amount to pocket gains and lower my risk.  What I am taxed on is the following:

155 shares times original price was $8,599.40

I sold those 155 shares for $12,601.80.  I am now taxed on the gains of those shares only, so I only pay taxes on $4,002.40.  At 30% tax bracket that means I pay total taxes of $1,200.72 on a $12,601.80 sale, or 10%.

Now, I have $12,601.80 cash, I still have 746 shares worth $60,694.56 (more than I originally invested) and I don’t pay the small tax bill for 10 months.  If Tim Hortons (or any other stock I own) happens to go down, I now have $12,601.80 to buy more shares of that stock, essentially getting more power without investing any other money and speeding up the compounding my moving the cash to something that is down and will raise sooner.

This is how AIM works, this is the strategy I’ve used for 10 years and this is how you avoid huge tax bills when trading stock.

Invest in peace…

What stocks are good for a recovering economy?

Well, I think we can all say that the doom and gloom economy is over and we are doing ok.  So what stocks can you take advantage of?

Simply put, the middle class and lower class will go out to restaurants more and take in more entertainment.  Movies, Amusement parks, things they couldn’t afford in the recession (even though if you didn’t lose your job, you made the same amount of money and it’s all silliness and never affected you.)

So, with that said I have taken up positions within the last month in:

Tim Hortons (THI) - Best coffee place in Canada and parts of the north.

Cracker Barrel (CBRL) - I drive way out of my way to eat here when I’m back east.  Best restaurant ever.

WWE (WWE) - I sold this in the $30’s and it tanked to the $10 range and I bought a crapload of it.  It’s up to $14.58 already.  

I still have positions in Coke (KO) and Pepsi (PEP) because people drink that constantly.  

I still have a position in Disney (DIS) because it’s Disney.

And my biggest position is still Apple (AAPL) because they are going to knock shit out of the park September 9th and have the greatest quarter in the history of the world this Christmas and there’s nothing anyone can do to stop them.

Invest in peace…

Great article from the Simple Dollar

Way to go CNNMoney!  Only took you an hour and 17 minutes to be completely wrong.  This is why you don’t listen to news about the stock market!  All these ‘reporters’ just make shit up.

Invest in peace…