Tuesday, April 01, 2008

Tradingwise it Was the Best Month Since May 2007

Full report to come shortly. But here are the realised gains results for the last several months:

After losing in January, I didn't do any futures trades in February as I practiced paper-trading. I did OK trading stocks and options. This month I did even better trading securities and gained a little in futures too. My NQ trading is OK, the other contracts need work :) I feel like I'm turning the corner. Hopefully, I can keep it up.

I also have more or less complete cash flow income figures for the first quarter in comparison with the whole of 2007:

Passive income is pretty much in line with last year. Typically, I receive my largest mutual fund distributions in the second quarter, which is the end of the tax year in Australia. Final dividends, which are larger than interim dividends in Australia also tend to be paid out in the second half of the year. Securities trading is in line with last years result. Futures trading obviously needs much improvement. Long-term capital gains are negative due to the switching of mutual funds I've been doing. It's not that these investments lost money but they have paid out in distributions more than the total gain since I bought them. Therefore, I realized a capital loss, which is a tax benefit, when selling. As I understand it, in Australia, all capital losses are deductible as if they were short-term losses and rebated at regular income tax rates, while only 50% of long-term capital gains are treated as taxable income. This makes capital losses particularly valuable. Also, in Australia, there is no formal rule against "wash sales" unless the tax office deems they were done for tax reasons only.


enoughwealth@yahoo.com said...

So, on average you've lost $107 per month trading ;)

BTW - capital losses are only tax deductible against any capital gains you've made that tax year. If you have more losses than gains, the net loss is carried forward until you have a capital gain in future tax years to deduct it against.

The only exception (that I know of) is if you classify some gains/losses as trading, rather than investing. If you are treated as a trader you can then treat any net losses as a deduction against other sources of income.

Bear in mind that I'm not a tax expert, and this is only based on what little I know of personal taxation. In an audit the tax office may have a different opinion ;)

mOOm said...

Yes that is how I understand it regarding the tax picture. Futures trading doesn't count as capital transactions from what I understand but ordinary income. It's a fuzzy area in the Australian tax code.

You are right, I lost $107 a month over the period I posted from the last good month till today. I will post a longer period in a new post.