CD accounts
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BIGIRON
Flashlight Enthusiast
Probably not. My wife, the banker, says a CD is essentially locked for the term of the CD. She suggests a Money Market account. They usually have a minimum balance requirement, but you are able to deposit and withdraw. She also cautions that the Patriot Act causes lots of hassle for accounts with offshore addresses/owners.
stockwiz
Enlightened
I'd recommend against a CD, because the interest you earn will be taxed as ordinary income, and the interest rate is so low as to not be worth it. Plus, you can't touch the money.
Dividend producing stocks are a much better route because dividends are taxed at a lower rate, and in many cases, the stocks pay a much higher dividend yield then would ever be found on a CD. A good example is the natural gas trust San Juan, which trades under the ticker symbol SJT. They have monthly dividends and have a yearly yield right now of roughly 7-10%.. and natural gas demand should remain strong for years to come.
My father has been holding shares of this stock for quite some time. The downside is you can't reinvest the dividends in new shares automatically... every month you are sent a dividend check by the company.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=sjt&sid=0&o_symb=sjt
Dividend producing stocks are a much better route because dividends are taxed at a lower rate, and in many cases, the stocks pay a much higher dividend yield then would ever be found on a CD. A good example is the natural gas trust San Juan, which trades under the ticker symbol SJT. They have monthly dividends and have a yearly yield right now of roughly 7-10%.. and natural gas demand should remain strong for years to come.
My father has been holding shares of this stock for quite some time. The downside is you can't reinvest the dividends in new shares automatically... every month you are sent a dividend check by the company.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=sjt&sid=0&o_symb=sjt
Draco_Americanus
Enlightened
A CD is protected agenst loss while raw stocks are not. If have no tolerance for risk then a CD is a way to go. I was lucky and got my CD when the market was doing good and it's getting me allmost 5% now. If you have tolernce for risk, stocks indeed can be the way to go. I myself go with all three. money market, CD, and stocks.
JerryM
Flashlight Enthusiast
stockwiz,
I have looked at some of those trusts.
I am wondering how they are taxed. I have some limited partnership stock, and it is taxed in a different manner. I haven't been able to learn how the trust such as SJT are taxed>
Jerry
I have looked at some of those trusts.
I am wondering how they are taxed. I have some limited partnership stock, and it is taxed in a different manner. I haven't been able to learn how the trust such as SJT are taxed>
Jerry
GJW
Flashlight Enthusiast
I have had CDs that I could make deposits into (in pre-approved amounts only) and I have had CDs that I could make withdrawls from (one time only without penalty).
As with anything else -- shop around.
As with anything else -- shop around.
stockwiz
Enlightened
Good points about the CD's. There's always a chance the stock could go down, such as in SJT's case, it wouldn't surprise me if the stock dropped to 21 before resuming it's uptrend. It would fare worse if natural gas dropped much below 5 bucks, which isn't expected, but still, risk is risk. These type of investments are meant to be multi-year at minimum.
As for the dividend issue, I know my father only paid 15% on the SJT dividends. From what I've read, virtually all dividend producing stocks are taxed at 15%, except some REITs or in the case of someone owning preferred shares, which can bring up issues. I'll have to look into that further.
This whole issue got me thinking... that old saying "it takes money to make money" .. man if I just had $500,000 ... a drop in the bucket for many of the elite, I could make it last my entire life through rather conservative investments... there are so many people out there that would just completely waste the entire sum in a short period of time...
As for the dividend issue, I know my father only paid 15% on the SJT dividends. From what I've read, virtually all dividend producing stocks are taxed at 15%, except some REITs or in the case of someone owning preferred shares, which can bring up issues. I'll have to look into that further.
This whole issue got me thinking... that old saying "it takes money to make money" .. man if I just had $500,000 ... a drop in the bucket for many of the elite, I could make it last my entire life through rather conservative investments... there are so many people out there that would just completely waste the entire sum in a short period of time...
JerryM
Flashlight Enthusiast
stockwiz,
Thanks for the reply. My question was based on the fact that limited partnership "dividends" are not taxed as such. They are considered as return on capitol. However, the tax will, I think, even out when one sells the shares, or when the capitol account reaches zero then all dividends are taxes as regular dividends. It seems to be somewhat complicated to me, and I was therefore wondering if the dividends of the trusts were taxed in the same way.
Jerry
Thanks for the reply. My question was based on the fact that limited partnership "dividends" are not taxed as such. They are considered as return on capitol. However, the tax will, I think, even out when one sells the shares, or when the capitol account reaches zero then all dividends are taxes as regular dividends. It seems to be somewhat complicated to me, and I was therefore wondering if the dividends of the trusts were taxed in the same way.
Jerry
