investing

4 tips for buying stocks with 'play money'

Choose the right type of account
Choose the right type of account © Goodluz/Shutterstock.com

More than a dozen members of the National Association of Personal Financial Advisors weighed in to answer our question on whether and how investors should experiment with a special account for buying stocks.

So that trading commissions don't take a big bite out of the relatively small sums relegated to the play money account, many of the NAPFA experts advise seeking out a low-cost brokerage account.

And, most favored using a plain vanilla taxable account instead of a tax-advantaged retirement account.

It's smart to keep your tax accountant and/or financial adviser in the loop, whether you're profiting or losing on trades, since both can have a significant tax impact, says Thomas Duffy, a financial planner with Jersey Shore Financial Advisors, LLC, in Red Bank, N.J.

Advisers may have ideas on how to mitigate taxes due when profits are made, Duffy says.

Indeed, Gugle agrees that losses on trades can offset taxes on gains, and when losses exceed certain yearly limits on deductions, they can be used to offset gains made in future years.

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

How do I repay IRA loan?

Dear Dr. Don, Hello, I read your column about short-term, 60-day loans from an individual retirement account. How do you withdraw funds from an IRA? Can a person redeposit the funds back into the same IRA? Or can the money... Read more

advertisement

Blog

Sheyna Steiner

The King may defect to Canada

Burger King is in talks to buy Tim Hortons and will likely join the list of corporate expats. What does the tax inversion strategy mean for investors?  ... Read more

Partner Center
advertisement

Connect with us