4 ms·

> It was neat in the beginning, but it's a pain to report taxes on, and the decreasing risk adjusted returns make it much less attractive than it used to be. T

by nether 12y ago

> It was neat in the beginning, but it's a pain to report taxes on, and the decreasing risk adjusted returns make it much less attractive than it used to be. The taxes are the biggest issue right now I think. There's no faculty in US tax code for reporting earnings on this kind of investment. If I heard right, I think some people lost all of their returns in 2012 due to written-off notes? I believe all of my returns (over the past four years) were taxed at my normal income rate. People have just been guessing at how to report their earnings in TurboTax. Haven't heard of any audits thus far... Also, as far as risk-adjusted returns go, it still beats equities, right?

gnopgnip 12y ago
Could you just use a roth/traditional IRA and not have to worry about the taxes each year?
7Figures2Commas 12y ago
> There's no faculty in US tax code for reporting earnings on this kind of investment. That's not true. > Also, as far as risk-adjusted returns go, it still beats equities, right? The S&P 500 was around 1,140 at the beginning of January 2010. It's now above 2,000. If you had bought SPY in January 2010, you'd be sitting on a gain of around 75% not including dividends. SPY is highly liquid (more than 80 million shares trade hands on any given day) and optionable, so you can exit your position quickly if necessary and easily hedge your position if desired. Needless to say, comparing the S&P 500 to a pure debt instrument is like comparing apples to oranges, but if your goal is to maximize risk-adjusted returns, you have to compare asset classes. Obviously, this isn't 2010. The market today is a lot harder to navigate. On the whole, equities look expensive and with a shift in interest rate policy almost certainly coming, the debt markets are tricky. As Sam Zell recently said, "This is the first time I ever remember where having cash isn't such a terrible thing."

by nether 12y ago

gnopgnip 12y ago

Could you just use a roth/traditional IRA and not have to worry about the taxes each year?

7Figures2Commas 12y ago

> There's no faculty in US tax code for reporting earnings on this kind of investment. That's not true. > Also, as far as risk-adjusted returns go, it still beats equities, right? The S&P 500 was around 1,140 at the beginning of January 2010. It's now above 2,000. If you had bought SPY in January 2010, you'd be sitting on a gain of around 75% not including dividends. SPY is highly liquid (more than 80 million shares trade hands on any given day) and optionable, so you can exit your position quickly if necessary and easily hedge your position if desired. Needless to say, comparing the S&P 500 to a pure debt instrument is like comparing apples to oranges, but if your goal is to maximize risk-adjusted returns, you have to compare asset classes. Obviously, this isn't 2010. The market today is a lot harder to navigate. On the whole, equities look expensive and with a shift in interest rate policy almost certainly coming, the debt markets are tricky. As Sam Zell recently said, "This is the first time I ever remember where having cash isn't such a terrible thing."