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Focusing on Personal Investment Behavior

Comments posted to “Five Steps for Gaining Control of Your Investments and Avoiding Mistakes,” by Carl Richards, in the March 2013 AAII Journal:

Very good information. For all the noise in the marketplace and endless amounts of data, the main thing is to focus on our own behavior, time frame

—James Joslin from North Carolina

I’m a new member, but a practicing CFP for many years. It is great to see that the very basic net worth is used first. It really is the barometer of how one prioritizes his earned income, commits to savings, how dollars are spent, etc. It’s pretty much the first thing I ask my clients to work on. Amazing how few really know the answer.

—Peter Jochems from Colorado

I found this presentation useful, but I was looking for more specific information. In that sense, I was disappointed with how this article managed to stay on the sidelines. For instance, being a retired person, I am more interested in wealth preservation and it would have been great if Mr. Richards talked about a few ways one can get this done.

—Durai Raghavan from Texas

Considering Taxes in Investments

Comment posted to “An In-Depth Look at the Tax Consequences of Asset Location,” by Kevin Trout, in the March 2013 AAII Journal:

These comparisons always make the same error in that they compare equal investment amounts. If I earn $10,000 and place it in my 401(k), I place all $10K in. If I earn $10K and invest it after taxes, I haven’t invested $10K; it is more like $7K. You have to take into account the taxes paid before the investment is made as well as the taxes afterward.

—Carl Birx from New York

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Kevin Trout responds:

In my Asset Location Model spreadsheet attached to the online version of the article, the formula for the aftertax rate of return includes a gross up for the tax deduction on the traditional IRA/401(k). So the model does indeed take into consideration the deduction or exclusion of those investments vehicles.

Choosing an Online Discount Broker

Comments posted to “Equal-Weighted ETF Helps Boost Model Fund Portfolio Return,” by James B. Cloonan, in the March 2013 AAII Journal:

Do I participate in your portfolios by buying your selected stocks/funds/exchange-traded funds through you as a managed account, or do I buy them through my broker?

—John Kneepkens from Washington

Charles Rotblut responds:

John, you will need to use a broker. AAII is a nonprofit organization and is not licensed to manage money for individual investors. Our Online Discount Broker Survey lists the discount brokerage firms most popular and highly rated by AAII members. Its results can be seen at http://www.aaii.com/brokersurvey.

There are not big differences between the top online brokerage firms. Rather, you should choose which broker to use based on the features that matter most to you: commissions charged, research provided, online tools, proximity of local offices, etc.

2013 Tax Rate Corrections

An AAII member kindly informed us that our revised 2013 tax rate tables contained a few errors. The correct numbers (with errors in parentheses) are:

  • For individuals filing as head of household with taxable income over $398,350 but not over $425,000, the 2013 tax should be $112,037.00 (a correction from $123,037.00) plus 35% of the amount over $398,350.
  • For individuals filing as head of household with taxable income over $425,000, the 2013 tax should be $121,364.50 (a correction from $121,394.50) plus 39.6% of the amount over $425,000.
  • For married taxpayers filing joint returns with taxable income over $398,350 but not over $450,000, the 2013 tax is $107,768.50 (a correction from $107,768.00) plus 35% of the amount over $398,350.

The 2013 tax rate tables on our website have been updated to reflect these changes. For the complete revised Tax Guide, go to www.aaii.com/guides/taxguide.


Discussion

Geoffrey from CA posted about 1 year ago:

i notice that 2 weeks ago was a question about sipro and the novy-Marx method. I also would like feedback on this. and How the Novy method compares with existing screens.

It would be good to add this to your Stock Screens that can be run at any time.

Or are you indicating that the Joel Greenblat Screen comes up with the same result?


Kevin Smith from Arkansas posted about 1 year ago:

In the April 2010 AAII Journal, a revised Piotroski strategy was reviewed. In sum TTM F-9 companies returned 306.4% during the study whereas TTM F 8-9 companies returned 1,570.3%. Logic would tell me to exclude F-9 companies from my purchases and only go with F=8 companies. Perhaps those rated F-9 have less upside potential than F-8 holdings.

Your thoughts?

Thanks,

Kevin Smith


Kevin Smith from Arkansas posted about 1 year ago:

In the April 2010 AAII Journal, a revised Piotroski strategy was reviewed. In sum TTM F-9 companies returned 306.4% during the study whereas TTM F 8-9 companies returned 1,570.3%. Logic would tell me to exclude F-9 companies from my purchases and only go with F=8 companies. Perhaps those rated F-9 have less upside potential than F-8 holdings.

Your thoughts?

Thanks,

Kevin Smith


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