Investment Losses

DietrichElliot asked:


Mark Twain’s oft heard adage – ‘buy land, they’re not making it anymore’ has been indirectly taken to heart by investors in the UK scouring the markets for the best investment. That is to say that in relation to the boom in the buy-to-let property market it is not the bricks and mortar which rises in value, but the underlying UK land on which the development sits. Indeed, the value of bricks and mortar deteriorates over time, so in some senses a UK property market investment is actually a UK land investment more than anything else.

In this article we will look not at the relative merits of a land investment vis-à-vis a property market investment but at whether the two (ie direct land investment versus indirect land investment) complement each other in an investment portfolio. The former subject is too extensive to discuss here and, at any rate, since many people already have property market assets the pertinent question for them is this: ‘does investment land complement property market holdings or is each investment opportunity best pursued in isolation?’.

Of course much depends on what type of investment land is being considered. For instance, self-build land investment is a natural bed-fellow of buy-to-let property market investment since it is common for investors to develop small plots of UK land and then retain ownership in order to earn rent from the resulting property. However, if your idea of the best investment is not one which involves buying land with planning permission or buying land without planning permission and then developing it out, there are land investment alternatives.

One such is buying land on a professional property and development project. This is sometimes known as Site Assembly land investment and often appeals to the investor for whom self-build land investment is not suitable. The growing market for investment land is being in large part serviced by Site Assembly investment land because, relatively speaking, the number of people investing in land is growing but only a small proportion have the necessary skills and/or appetite for self-build land investment.

With this in mind, we can refine the original question thus: ‘does Site Assembly land investment complement buy-to-let property market investment or is each investment opportunity best pursued in isolation?’ (since Site Assembly land investment is becoming more common).

The key considerations in land investment, and in fact any investment, are threefold:

-Risk (what is the chance of gaining/losing)

-Term (how long is the investment for?)

-Liquidity (how easy is it to exit the investment?)

These criteria will help elucidate whether buy-to-let property market investments and investment land on a Site Assembly project are complementary. In investment terms (ie land investment and otherwise), ‘complementary assets’ are those that provide diversity, so the Risk, Term and Liquidity should be different in each case.

Let’s see:

Buy-to-let property market investment

-Risk: Low

-Term: Long

-Liquidity: High

Site Assembly land investment

-Risk: Medium

-Term: Medium

-Liquidity Low

Although these are generalisations, the above broadly reflect the true nature of buy-to-let property market investment and Site Assembly land investment. Naturally, some buy-to-let property market investments can be medium term just as some Site Assembly land investment projects offer moderate or even high liquidity but generally speaking the information above holds true.

It is therefore reasonable to conclude, working from the premise that complementary investment assets display different profiles (Risk, Term and Liquidity), that Site Assembly land investment and buy-to-let property market investment do complement one another in a portfolio.

This article has not attempted to assess the extent to which investment land is superior to property market investments (or vice-versa). What it has attempted is to consider the growing popularity of investing in land (especially on an existing development projects) and whether such a venture is compatible with a buy-to-let property market investment portfolio.

Rational analysis, as set-out above, suggests that Site Assembly land investment and buy-to-let property market investment are complementary.



LEROY

Luv2Answer asked:


I asked this yesterday and I only got 1 response so I’m posting again:
This is not homework! I am a bookkeeper at a small company and haven’t had to deal with this before. We recently sold $30,000 in Long Term Investments. I made a JE to Debit the Cash Account and Credit the Long Term Investment Asset on BS. I think I should have made a journal to hit the income statement for Recognized Gain/Loss on Investment. If I do, which I don’t know what it is yet, what the heck would be the Credit side of the entry. I have no idea what the cost or gain/loss was. We asked the broker to just cash out a specific dollar amount, not a certain fund or amount of shares. Please help. 10 points to best answer. Thank you!!!!!
These answers help but what is confusing me is that is looks like last year the previous accountant Debited - Recognized Gain/Loss on Sale and Credited - L/T Invesment Undeposited Cash. I have never even heard of such an account before. I guess what’s right is more important than what they did before because I’m going to be held accountable and need to support whatever I do.

GRANT

LoganDM asked:


I bought a show horse, basically as an investment. I bought it myself rather than forming an LLC but am reconsidering that. My question is, can I deduct losses on my taxes for things like feed, stabling, vet bills, and insurance? If not, what could I if I had formed an LLC, and can I transfer assets to the LLC if I create one now?

PETE

kumaran asked:


Commercial real estate investing is a kind of investing which is used for business purpose. The commercial real estate investing property is different from other real estate investing like agriculture, residential and other industrial purpose. Commercial real estate investing property provides reasonable price consideration from the investment property and also provides income for long period. In real estate investing, real estate investors make investment on commercial real estate investing. Commercial real estate investing is made by most of the real estate investors, because it fetches more profit for the seller at the time of sale of real estate investment property.

The main purpose why people prefer to make their real estate investing is that commercial real estate investing provides stability and high return in the market. The other advantage we obtained from commercial real estate investing is that it provides investment securities for the real estate investment property purchased from the real market. Real estate investing market is said to be the stable market and it also carries high returns on investment for the property purchased. It is the obligation of the real estate investor to see that the real estate investing property fetch more profit among the customer and it realize more profit. Some of the standard features of commercial real estate investing are

High return

The main advantage of commercial real estate investing property is that it carries high return on investment. More number of people procures real estate property because of its returns provided. Real estate investor enjoys the benefits provided by the real estate property with high return and turnover during the period of sale of real estate investment property. Real estate sector is the wide sector where it carries huge number of properties required with desire prices.

Stability

The other unique feature of commercial real estate investing property is that its stability and consistency with the world market. When though more number of real properties are available in real estate investing market, still commercial estate investment obtains more demand among the customers for reasonable price consideration. Real estate investing benefits are provided more in real estate investing and it is due to the stability provided in the real market.

Commercial estate investment provides long term security of cash flow for the real estate investors who had made their real estate investing. Commercial real estate obtains more demand among the customer and they provides more return on investment with principal and interest. This kind of investment obtains more demand, growth, return and stability compared to other real estate investment property in the real estate market.



GARY

James Delrojo asked:


In the world of investing there are many different investment vehicles and strategies but they can be split into three broad categories. The advantage of thinking from this point of view is that it makes it easier to decide which form of investing or which combination of investing will best suit you.

Let’s have a look at the three broad categories of investing and look at the advantages and disadvantages of each.

Passive Investing

Passive investing is when you put the investment decision making into the hands of someone else, ideally an expert investment manager.

The advantages of passive investment are that you are not required to have any investment expertise and you don’t have to invest your time, only your money. The disadvantages are that firstly you have relinquished your control over your money and secondly the returns for these types of investment are usually uninspiring.

Common examples of passive investing are savings accounts, government bonds, property trusts and mutual funds. Most people invest for their retirement under some form of passive investment that usually has special tax concessions which vary from country to country.

Active Investing

With active investing you take an active role in managing the investment. This form of investing could have a long term focus such as a buy and hold share portfolio or it could be a short term focus such as futures trading.

To do well in active investing you need to have considerable knowledge of the investment vehicle or vehicles that you are using. You also need to understand the basic principles such as when to collect profits, when to cut losses and how to analyze the market. You also need the emotional strength to apply these strategies as required (this is often the most difficult aspect of active investing).

The advantages of active investing are that you have greater control over your investment than you do with passive investing and the potential for profit is theoretically higher. The disadvantages are that you need to invest time in acquiring knowledge and skills and in managing your investments and also that the potential for loss is also generally far greater than in passive investing.

Common examples of active investments are share, options, futures, and currency trading, buy and hold share portfolio building, buy and hold residential or commercial property, and property trading.

Creative Investing

With creative investing you actually change the investment in some way that is designed to manufacture profit. This form of investment requires a lot of skill and experience but if you have that skill and experience then you can create huge profits by being able to visualize what your investment could be once you have applied your imagination to it. For this reason creative investing is often described as turning thought into money.

For example if you are a property developer there is a huge variety of possible developments that you could design and build on a particular piece of land. Amongst that huge set of possibilities there are also a huge range of potential outcomes ranging from high profit to huge loss and including all the points in between.

The advantages of creative investing are that it has the highest profit potential and the highest degree of control and flexibility. The disadvantages are that it requires the highest degree of knowledge, usually involves borrowing large sums of money and also has a huge potential for large losses if you get it wrong.

Common examples of creative investments are property development, property renovation, business renovation and new product development and marketing.

When you are deciding which of these three broad categories best suits you need to consider your knowledge and experience, your strengths and weaknesses, your access to resources, including time and money, and in particular you need to consider your personality including your time management skills, decision making skills, tolerance for risk and your self discipline.

There are of course many expert consultants to help you in each field and many sources of knowledge and experience to tap into.

I hope that this article was useful in helping you see where the various types of investments fit into the scheme of things.



RUBIN

Uchenna Ani-Okoye asked:


This is a good exercise in building wealth in the unstable world of stock investing. It’s throwing in the towel, and you don’t want to get involved with stock investing with companies that have that attitude. Online stock investing can be a great way for anyone to get involved in the market.

Contrary to the short term perspective of most investors today, all the big money is made by catching large market moves - not by day trading or short term stock investing. Fraudsters don’t think twice before developing stock investing, commodity or option trading courses to make a little extra money for themselves regardless of whether or not what they teach helps their students. If penny stock investing is a junior level course then day trading is a senior level course that most seniors will fail.

We are looking for titbits of information, what we call the scuttlebutt method of stock investing. Now stock investing can be a crap shoot at best. In 1998 he was shouting out to the world to ‘get out’ of the stock market but now he is shouting to everyone that it is time to ‘get in’. The Wallet Doctor is not only sought after for investment advice and coaching in stock investing but also in futures trading and real estate investing.

They don’t know anything about stock investing and they often lose a few thousand dollars very quickly. The second richest man in the world, Warren Buffett, has made his millions from stock investing. This way of stock investing or trading is called the Darvas strategy.

In our investment work when we get involved in stock investing, we do hands on stock research. What any ‘vexed’ shareholders are forgetting and he is not, is that Rule 1 in stock investing is, Don’t lose money. As mentioned earlier, stock investing is not only knowing the companies but also knowing the timing of investment.

Since I am an advocate of stock investing, let me make the case for stock investing. Penny stock investing can be profitable. Also, online stock investing has opened the door wide for overseas stock trading, giving you more investment opportunities than ever.

Well, one of the oddities of stock investing is that stocks do not necessarily behave according to the company’s condition. The new book, ‘Sensible Stock Investing’, describes in detail the relatively simple techniques that the individual investor can use to sidestep large losses such as not using margin, not selling short, and controlling losses with sensible sell-stops. Penny stock investing is a junior level course at least.

Combined, the return on your investment here is massive compared to regular stock investing. I want to emphasize that CAPM is based on the notion that the stock market efficiently translates all information known about the stock market into stock prices for stock investing purposes. What do I need do stock investing.

Even the stock investing pro needs tips now and again and is on a path of continuous daily learning. Beyond that, however, online stock investing does have a lot of perks that make it accessible to virtually anyone. So if you are new to investing in the stock market take some time and learn how to by taking a stock investing course.

Nowadays, stock investing can already be done by the man on the street. Everyone from retirees to school children, have managed to get involved in online stock investing for a whole host of reasons.



PATRICK

Chris M asked:


I get quarterly reports on my 457(b) plan. I almost always have gains, however, I am unsure on how to determine if the investment options are strong earners, or merely mediocre. What is the process for determining if the investment’s I’ve chosen are strong when the option amounts change due to varying bi-weekly contributions? How would I determine if the gains are good in the following example for one quarter?
Example:
Beginning Balance: $5,011.33
Contributions / Transfers In: $370.00
Gain/(Loss) / Interest: $136.68
Ending Balance: $5,518.01

Since starting in 10/02 I have contributed $3993.00 and had gains of $1525.01. However, the contribution amounts have varied greatly over this time period. So what is the proper gage on success? At 35 years old, my investments are diversified between high and moderate risk with some low risk mixed in.

WILLARD

JP5 asked:


Example:
Dec 2007: $4000 Roth IRA contribution made in fund XYZ
Jan 2008: Value of investment in fund XYZ falls to $3500. Determined that $4000 was an ineligible contribution so $3500 is withdrawn.
April 2008: $500 capital loss for tax year 2007?

KERRY

ashleybeth131 asked:


This is for an oil and gas investment. The investor already received any deductions, loss, etc.. the year they invested. The only thing to report is the revenue they received. How do I fill out the K-1 in this situation?
I’m not a CPA, I’m an executive assistant and this task was just given to me by my boss for some reason. I have no tax experience….please help!

ABE

unleashthefury asked:


I own three investment rental properties and I can take huge losses on them. How do we file so that we pay the least amount of taxes. Together? Married separately? Can she take losses on my rental properties. Help Please !!!! I don’t want to pay someone elses welfare check with our hard work.

RAUL