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* Reporting sales of securities on your tax return is tedious. Reporting fractional shares and wash sales (which are likely with the proposed scheme) is even mo

by junar 7y ago

* Reporting sales of securities on your tax return is tedious. Reporting fractional shares and wash sales (which are likely with the proposed scheme) is even more tedious. * Credit cards exist. If you're wealthy enough to have taxable investments, your credit is probably good enough for credit card rewards. * From a behavioral finance standpoint, mixing long-term investments and short-term spending is probably not a good idea.

snarf21 7y ago
Absolutely. Also, isn't part of the point of investing to defer your taxable positions until a later point when you hope to have a lower rate. This idea seems silly and I don't think that is what Robinhood is planning. They just want to be the investment brand of default in 20 years and they are doing whatever they can to get young people hooked now including letting them buy 0.1% of a single share of Facebook.
JumpCrisscross 7y ago
> Credit cards exist. If you're wealthy enough to have taxable investments, your credit is probably good enough for credit card rewards. Replicating this would involve having little to no cash, spending on a card, and then liquidating investments to pay off the debt. Which is similar to how most wealthy persons manage their consumption. Of course, this requires having access to credit, assets, and money transfer services. Broadening access to that isn't necessarily a bad idea.
- arcticbull 7y ago
  > Which is similar to how most wealthy persons manage their consumption. That's not really true. Wealthy people know not to lose their principal. They do this by borrowing either unsecured or on margin against their assets, the using dividends and interest to pay off their spending leaving the assets themselves untouched. Doing this in a way that leads to increased net worth requires a cushion.
- asdfman123 7y ago
  I mean, unless you're at the absolute bottom end of society or you are terrible with money, you can get a credit card and pay it off monthly. There are poor people who are responsible with money. My fiancées parents are low-wage Mexican immigrants -- they have debit cards and only spend money that they have. But poor people don't need those kinds of micro optimizations that will save them pennies a week (do you need an extra 1% interest in the $14 in your checking account?). There is way, way more low hanging fruit than that.
toast0 7y ago
> If you're wealthy enough to have taxable investments With the new world of zero commissions and fractional shares available (soon?), the minimum wealth required to buy stocks isn't very much. I still don't think this makes very much sense, though. If you can get credit, buying now and settling in a month would mean you have time to manage a more strategic sale. If you don't have access to credit, presumably because of lack of wealth, volatility is going to kill you --- you'd be much better served with a (low) interest checking account.
Invictus0 7y ago
The point of this proposal is clearly not to help the hoi polloi, but to add some billions to the market so investors can squeeze in a few more points from the unproductive cash sitting in checking accounts. Airbnb, except the hotel rooms are checking accounts and the tourists are billionaires.
- asdfman123 7y ago
  Nah, the point of this is so rich, nerdy software engineers who have a lot of money but aren't interested in buying status symbols can feel warm and fuzzy about their financial hyper-optimization.

by junar 7y ago

snarf21 7y ago

Absolutely. Also, isn't part of the point of investing to defer your taxable positions until a later point when you hope to have a lower rate. This idea seems silly and I don't think that is what Robinhood is planning. They just want to be the investment brand of default in 20 years and they are doing whatever they can to get young people hooked now including letting them buy 0.1% of a single share of Facebook.

JumpCrisscross 7y ago

> Credit cards exist. If you're wealthy enough to have taxable investments, your credit is probably good enough for credit card rewards. Replicating this would involve having little to no cash, spending on a card, and then liquidating investments to pay off the debt. Which is similar to how most wealthy persons manage their consumption. Of course, this requires having access to credit, assets, and money transfer services. Broadening access to that isn't necessarily a bad idea.

arcticbull 7y ago
> Which is similar to how most wealthy persons manage their consumption. That's not really true. Wealthy people know not to lose their principal. They do this by borrowing either unsecured or on margin against their assets, the using dividends and interest to pay off their spending leaving the assets themselves untouched. Doing this in a way that leads to increased net worth requires a cushion.
asdfman123 7y ago
I mean, unless you're at the absolute bottom end of society or you are terrible with money, you can get a credit card and pay it off monthly. There are poor people who are responsible with money. My fiancées parents are low-wage Mexican immigrants -- they have debit cards and only spend money that they have. But poor people don't need those kinds of micro optimizations that will save them pennies a week (do you need an extra 1% interest in the $14 in your checking account?). There is way, way more low hanging fruit than that.

toast0 7y ago

> If you're wealthy enough to have taxable investments With the new world of zero commissions and fractional shares available (soon?), the minimum wealth required to buy stocks isn't very much. I still don't think this makes very much sense, though. If you can get credit, buying now and settling in a month would mean you have time to manage a more strategic sale. If you don't have access to credit, presumably because of lack of wealth, volatility is going to kill you --- you'd be much better served with a (low) interest checking account.

Invictus0 7y ago

The point of this proposal is clearly not to help the hoi polloi, but to add some billions to the market so investors can squeeze in a few more points from the unproductive cash sitting in checking accounts. Airbnb, except the hotel rooms are checking accounts and the tourists are billionaires.

asdfman123 7y ago
Nah, the point of this is so rich, nerdy software engineers who have a lot of money but aren't interested in buying status symbols can feel warm and fuzzy about their financial hyper-optimization.