Portfolio

Updated: December 25, 2023

Basics for setting up a tax advantaged strategy for investing in the stock market.

‼️ This information is for learning and should not be considered financial advice.
‼️ This page is not operated by a financial advisor. Use information at your own risk.

Table of Contents

• Handsoff
• Taxes
• Roth
• Crypto
• Taxable
• MLPs
• Bonds

Handsoff Approach with ETFs

This is the Warren Buffett approach where he wished he had just put everything into an index fund. Well nowadays we have something a little better. It is called an ETF and that is the route to go. Fill ROTH IRA FIRST!!

For a Dividend type investment: SPYD (S&P 500)
For more Growth investment: VOO (S&P 500)
For a monthly income from covered calls: QYLD (NASDAQ 100) RYLD (Russell 2000)

TAXES

To maximize profits it is important to place certain classes of capital gains in the proper account. One account should be highly liquid and the other for long term like a ROTH IRA.
Below are not the exact stocks to buy but are just examples of the types related to category.

Roth IRA (pre-taxed)

• Long term account. This money is not planned to be touched until at least 59½.
• $6000.00/year. Old farts can do $7000.00 to ‘catch up’ to the youngsters.
• This is first place investment money should be placed because of tax advantage.
• Place REITs (Real Estate Investment Trusts) here due to them being taxed as ordinary income.
• Certain ETFs (Exchange Traded Funds) that have high dividends, turnover, income.

⇢ 🏬 REITs: CCI O STAG STOR STWD WELL WPC
⇢ 📈 Growth Stocks: MRNA GOOG AMZN NFLX Z PYPL DIS F (short term capital gain - assets held less than a year)
⇢ 💰 Ordinary Dividends: QYLD JEPI NUSI
⇢ ₿ Bitcoins: BTC XMR ETH BTT SOL

My REIT List

Crypto

• Invest no more than 10% of your total wealth here. Recommended 5%
• Watchout for shitcoin (smaller alt coin scams)
• Buy on Crypto dips. Assume money is gone. High risk.

TAXABLE

• Create a Taxable Qualified Dividend Portfolio for steady income or supplement retirement.
• Long term account - the only tax advantage is to hold stocks forever!
• After ROTH contributions are made for the year place investments here.
• Qualified dividends and ETFs are great. (Watch those expense ratios)
• If money is needed due to an unforseen circumstance, try not to liquidate.
• If case of jobloss use cash from dividends instead of selling any stock. (Do not set dividends to reinvest)
• Master Limited Partnerships (MLP) are limited to natural resources, finance and real estate sectors.

⇢ 🎩 Qualified Dividends: T MO CVX XOM VZ ABBV PRU IBM MMM BGS MRK GIS KO LEG IP (or SPYD ETF for handsoff) ⇢ 🏔 Growth ETFs: SCHG SCHB SCHH ITOT IVV VOO VTI QQQ
⇢ 💎 Value ETFs: SCHD SCHV VTV VONV SPYV
⇢ 📈 Growth Stocks: MRNA GOOG AMZN NFLX Z PYPL DIS F (long term capital gain - assets held more than a year)
⇢ 🤝 MLPs: AB MMP EPD CQP

My Dividend List
My Growth List

Master Limited Partnerships

List of MLPs

MLPs are an investment that combines the tax benefits of a limited partnership (LP) with the liquidity of stock. This one reason why they
are typically not placed inside a IRA. To qualify a firm must earn 90% of its income through activities or interest and dividend
payment pertaining to natural resources, energy, commodities or real estate.

⇢ An MLP is a company organized as a pulically traded partnership. (PTP)
⇢ They have two types of partners. General Partners who oversee operations and Silent Partners who are investors. (also limited partners)
⇢ Investors receive tax sheltered distributions from MLP.
⇢ MLPs are considered low risk, long-term investments, providing slow but steady income stream.
⇢ There is no tax at the company level as the company operates as a passthrough.
⇢ Unitholders are paid out based on the Distributable Cash Flow. Unlike dividends these are not taxed when received. Instead reduce cost basis.
⇢ The reduced cost basis creates a tax liability that is deferred until the shares are sold.
⇢ Usually only 10-20% of a cash distribution is taxable while the other 80-90% is tax deferred.
⇢ Do not buy these in an IRA, Pension, or 401K. This is typically not allowed. Use a regular taxable brokerage account.

My MLP List

EMERGENCY FUND

Series I Bond

• Protect against inflation adjusting with CPI-U easily outpacing Savings or CDs.
• Cannot cash in the first year.
• No penalty after 5 years.
• Pay interest up to 30 years.
• Taxed by Fed but not by state or local.
• Purchase ONLY from Treasury Direct Purchase $25 to $10,000 per year.

Treasury Inflation Protected Security (TIPS)

• Similar to SERIES I BOND but has no penalty (holding) period.
• Can be bought and sold like a stock. (Fidelity, Schwab, ETrade, etc)
• ETFS: TIP VTIP SCHP
• Great for saving for large purchase like a car or home.