My 1st Million At 33 – yes, you can do it too

Today, I sold some of my HMY, and bought the same amount in GOLDX.  My precious metal portfolio consists of too many individual stocks, but not enough in mutual funds.  Since precious metal sector is VERY volatile, it is very important to diversify sufficiently so that you won’t be stuck with underperformance due to incorrect weighting or selection of the stocks.

I sold HMY to take the advantage of my child’s tax bracket.  I will be paying some kiddie tax, but paying a very low tax on his first $1600 investment earnings is a good deal to me.  If I am not wrong, his first $1600 investment earnings only has a $80 tax liability ($800 deductible, and $800 long term capital gain).

HMY management really pissed me off one time, by trying to buy GFI, a much bigger and better company, at the BELOW market price.  HMY dragged down GFI with it, and I ended up holding both stocks all the way down (a long way down of some -40%) and back.

I will probably be doing more adjustments to my portfolio, using this downturn as the opportunity to sell for less capital gain.  It sounds almost funny, but it is actually quite tax-effective.  I only do this at the downturn.  I shift among different stocks, mutual funds, and accounts, but still staying in the same sector.  This way I can shift the tax and capital gain around, and properly allocate for my tax and capital gain budgets.  Of course, every shift needs to be examined very closely, because the goal often is not just paying less taxes, but achieving a higher return/less risk when the market rally next time.