Personal-finance reactionblogging, part 2
Jun. 5th, 2021 10:33 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
brin_bellway[cw: government bullshit]
(part 1)
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Several personal-finance bloggers: Look, a strategy based around holding dividend stocks isn't right for everyone, but it's right for *me*. I like the psychological benefits of receiving passive income directly rather than merely implied in rising prices: it helps me keep going when times are bad. Also there's some nice dividend-related tax credits if you're holding them in non-registered accounts, but mostly it's the psychological thing.
(Several *other* personal-finance bloggers: Eh, I wouldn't go that route myself, but it's a respectable alternative if you're into that.)
Me: When it comes to finance I'm pretty big on permeating yourself with optimality facts until your emotions line up with them, and have already done so regarding [total return] and [not selling into a crash if you can possibly avoid it]. This doesn't sound like the right strategy for me. *moves on*
[weeks later, after it finishes percolating through the back of my brain]
Me: ...wait, hang the fuck on, did you just say what I think you just said? Did you just say y'all have managed to come up with a non-terrible (indeed, good enough that a bunch of personal-finance nerds consider it a reasonable choice! that's high praise!) investment strategy revolving around the holding of *individual stocks*? Holy *shit*!
That...fuck, dude, you don't know the *half* of it regarding tax efficiency! To the best of my knowledge, holding individual stocks is *completely legal*! Not "technically legal but only if the index fund humours its US-citizen holders enough to put out PFIC statements *and* you pay a specialist 500 USD/year to sort out your incredibly complicated taxes", just fucking straight-up legal!
I'll have to do more digging and probably talk it over with a tax specialist, but...psychology or no psychology, for non-registered accounts dividend stocks might simply win the "dividend stocks vs index funds" debate by *default*, the same way RRSPs win by default in the "RRSP vs TFSA, which should you prioritise contributing to" debate.
(Of course, they aren't specifically optimising for "not having to hold index funds in a non-registered account", so it's possible that there exist even better individual-stock-based strategies for people who *don't* particularly value the psychological benefits of dividends. But they seem to be firmly within the personal-finance-nerd Overton window, and if I follow their lead I can get tips from them.)
(part 1)
---
Several personal-finance bloggers: Look, a strategy based around holding dividend stocks isn't right for everyone, but it's right for *me*. I like the psychological benefits of receiving passive income directly rather than merely implied in rising prices: it helps me keep going when times are bad. Also there's some nice dividend-related tax credits if you're holding them in non-registered accounts, but mostly it's the psychological thing.
(Several *other* personal-finance bloggers: Eh, I wouldn't go that route myself, but it's a respectable alternative if you're into that.)
Me: When it comes to finance I'm pretty big on permeating yourself with optimality facts until your emotions line up with them, and have already done so regarding [total return] and [not selling into a crash if you can possibly avoid it]. This doesn't sound like the right strategy for me. *moves on*
[weeks later, after it finishes percolating through the back of my brain]
Me: ...wait, hang the fuck on, did you just say what I think you just said? Did you just say y'all have managed to come up with a non-terrible (indeed, good enough that a bunch of personal-finance nerds consider it a reasonable choice! that's high praise!) investment strategy revolving around the holding of *individual stocks*? Holy *shit*!
That...fuck, dude, you don't know the *half* of it regarding tax efficiency! To the best of my knowledge, holding individual stocks is *completely legal*! Not "technically legal but only if the index fund humours its US-citizen holders enough to put out PFIC statements *and* you pay a specialist 500 USD/year to sort out your incredibly complicated taxes", just fucking straight-up legal!
I'll have to do more digging and probably talk it over with a tax specialist, but...psychology or no psychology, for non-registered accounts dividend stocks might simply win the "dividend stocks vs index funds" debate by *default*, the same way RRSPs win by default in the "RRSP vs TFSA, which should you prioritise contributing to" debate.
(Of course, they aren't specifically optimising for "not having to hold index funds in a non-registered account", so it's possible that there exist even better individual-stock-based strategies for people who *don't* particularly value the psychological benefits of dividends. But they seem to be firmly within the personal-finance-nerd Overton window, and if I follow their lead I can get tips from them.)
no subject
Date: 2021-06-05 04:31 pm (UTC)no subject
Date: 2021-06-05 05:20 pm (UTC)---
While the finance nerds were *aiming* at psychological benefits from having Money show up in your account (rather than merely having the prices of your stocks go up), they probably just accidentally gave me a method for [continuing to invest in the stock market in a reasonably good, non-gambling manner] even after I max out my official retirement account†, *without* the IRS making me navigate a minefield of tax laws and jump through a zillion expensive hoops designed to discourage people from keeping their money offshore. (The laws restricting foreign investments make no exceptions for the country you *live* in, if the country you live in is not the USA. Hell, I'm lucky they were merciful enough to carve out an exemption for Canadian official retirement accounts: some countries don't even get *that*.)
Is this relevant to my life? Not currently: I still have a lot of catching up to do on all the home repairs and suchlike that we've been putting off all these years because we couldn't afford them, so it's going to be a while until I have a chance to max out my retirement account and start wondering where else to keep my long-term savings. Will it *ever* be relevant to my life? God willing, no: there *are* lobby groups trying to get the United States to make like the rest of the world (yes, yes, except Eritrea) and stop demanding that people who don't even live there adhere to their tax laws, and maybe the lobbyists will have succeeded by the time I have enough money to start seriously considering these things. But I like to know my options so that my future isn't just a murky mess of "well, guess we'll have to cross that bridge when we come to it", and some of those bridges are looking significantly brighter today.
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†I think the closest American analogue is a "traditional IRA".