Dominican Bonds

[Yourmaninvegas]

You know that I have been privileged to meet you on and off line. I respect you and your opinions and "dictionary use" of my primary language. However (especially since this convo is OT ) I will not discuss the nuances of certain words. I only "returned" to posting on DR1 since I thought my infomation on MLPs would be of value.
I have no desire to engage in ping pong chats that are a daily occurrence and for this reason, as I explained to one of the mods, my postings here are limited.

I will send you by DM some alternative ways the word "privileged " is used".

Understood.

And although I replied to your message specifically.
My posts are intended for all to read.
The "privilege" word seems to rub some the wrong way.
That is their problem.

I consider it a privilege to receive your (DMs) and read your posts even in a limited form.
They always contain great informational value.

I understand the "ping pong chat" content.
Only have to look at post #39 in this thread to see the worst of what DR1 posters have to offer served up in useless one liners.

Your information on MLPs were way over my head and my pay grade.
But I found your post very interesting.
So many different ways to invest and make money.
It is amazing to me.

You know just being a gringo negro trying to make it in a Dominican world.

 

[SantiagoDR]

There is a foreign earned income tax exclusion, and you can get credit for foreign taxes paid, but what else would you be exempt from paying US taxes on?

Interest is NOT considered foreign earned income for tax exclusion, thus NO income tax exclusion.

 

[johne]

Understood.



I understand the "ping pong chat" content.
Only have to look at post #39 in this thread to see the worst of what DR1 posters have to offer served up in useless one liners.

Your information on MLPs were way over my head and my pay grade.
But I found your post very interesting.
So many different ways to invest and make money.
It is amazing to me.

You know just being a gringo negro trying to make it in a Dominican world.

Understood. I have elected to eliminate posts such as post #39 from things that annoy me and hence I am not a valued contributor here any longer. Perhaps DR1 needs content on slow days? IDK.

 

[playacaribe2]

And for that (investment income and capital gains) you need to refer to the "Bond tread" and PC2' comments of tax advantages of various entities to structure the tax advantages. There are some options among that mix that will give the holder income a reduction of 75-80 % in the tax.

Disclosure: Not for everyone on the planet.

.......And continuing, MLP's which you referred to above, return to the shareholder, usually quarterly, capital gains in the form of Qualified Dividends. Qualified dividends are treated as return of capital and taxed at the lower capital gains rate, versus ordinary dividends you would receive from shares of let say Coca Cola, Pepsico, etc. and the like which are treated at your personal tax rate.

Now if foreign corporations, like BHD, Banco Popular could pay qualified dividends instead, they would be much more attractive as a risk asset investment.......but they cannot. Ditto DR sovereign bonds, their interest payments are taxed at the holders personal tax rate.

And even more layers of complication enter if you hold assets in tax advantaged accounts.

Clear as mud I am sure.............because interest and dividends are separate categories.......and very often confused. Interest is what you receive from bonds either corporate or sovereign. Dividends are what you receive from stocks.....................that payment being either categorized as ordinary or qualified.

For investment purposes, those wishing to buy sovereign bonds of the DR, might look to many of the sovereign bond funds that package DR bonds and those of other countries together to offer a certain yield and risk rating.

Investing is really not that difficult.................but the US tax code certainly makes it seem that way.


Respectfully,
Playacaribe2

 

[johne]

.......And continuing, MLP's which you referred to above, return to the shareholder, usually quarterly, capital gains in the form of Qualified Dividends. Qualified dividends are treated as return of capital and taxed at the lower capital gains rate, versus ordinary dividends you would receive from shares of let say Coca Cola, Pepsico, etc. and the like which are treated at your personal tax rate.

Now if foreign corporations, like BHD, Banco Popular could pay qualified dividends instead, they would be much more attractive as a risk asset investment.......but they cannot. Ditto DR sovereign bonds, their interest payments are taxed at the holders personal tax rate.

And even more layers of complication enter if you hold assets in tax advantaged accounts.

Clear as mud I am sure.............because interest and dividends are separate categories.......and very often confused. Interest is what you receive from bonds either corporate or sovereign. Dividends are what you receive from stocks.....................that payment being either categorized as ordinary or qualified.

For investment purposes, those wishing to buy sovereign bonds of the DR, might look to many of the sovereign bond funds that package DR bonds and those of other countries together to offer a certain yield and risk rating.

Investing is really not that difficult.................but the US tax code certainly makes it seem that way.


Respectfully,
Playacaribe2

Added... if energy is not your cup of tea (it is for me)there are MLP in real estate. Since I am heavy invested in real estate I'v elected to go with the energy entities for some diversification.

 

[playacaribe2]

Added... if energy is not your cup of tea (it is for me)there are MLP in real estate. Since I am heavy invested in real estate I'v elected to go with the energy entities for some diversification.

Yes, but not that many, most are in the energy space. Brookfield (BPY) is the only one I am familiar with in real estate.

I have previously held two MLP’s, one now having changed structure and the other still trading. Both were suggested to me by a friend and well known mutual fund manager. Both were successful investments for me, but at least in my case at the time, did not provide what I would consider as game changing tax savings.

Every investor, before they invest in anything, DR bonds or otherwise, and we all are investors in one way shape or firm, needs to evaluate their personal goals, their time line horizon, and their risk tolerance before plunging headlong into any investment…….and then be prepared to continually watch that investment to make sure it is meeting those goals and yes be prepared that not all will work out for the positive and then be prepared to either accept those losses and move on or double down and wait if your conviction warrants.

The old investing axiom rings true, there is a season for all investments, but not an investment for all seasons.


Respectfully,
Playacaribe2

 

[cavok]

Foreign income means working income - but I don't believe that applies to investment income which would be designated as capital gains or ordinary interest

That's correct. The exclusion applies to income received as wages or salary received for working - not interest or capital gains.

 

[cavok]

Interest is NOT considered foreign earned income for tax exclusion, thus NO income tax exclusion.

That's correct. The IRS is referring to wages and salary received from working here.

 

[Yourmaninvegas]

Every investor, before they invest in anything, DR bonds or otherwise, and we all are investors in one way shape or firm, needs to evaluate their personal goals, their time line horizon, and their risk tolerance before plunging headlong into any investment…….and then be prepared to continually watch that investment to make sure it is meeting those goals and yes be prepared that not all will work out for the positive and then be prepared to either accept those losses and move on or double down and wait if your conviction warrants.

The old investing axiom rings true, there is a season for all investments, but not an investment for all seasons.

Word‼️
Solid advice.
I would also add that individuals should not always go with easy and understandable for them.
If they don't understand an investment...expend a little brain energy and see if they can make sense of it.

I have been aware of several different asset classes for years that only now I have gained enough understanding of them to make intelligent investment decisions in them.
Give yourself time...not only to understand the investment, but also for the investment to develop and produce.
Pay just as much attention to the entry point as the exit point.

 

[playacaribe2]

Pay just as much attention to the entry point as the exit point.

Yes.

Number 2 of the 7 Habits of Highly Effective People by Franklin Covey;

"Begin with the end in mind."
Define clear measures of success and a plan to achieve them.

Will the return on Dominican bonds support a plan for financial self-sufficiency if that is the goal?

What course of action to take when the price of those bonds rises significantly..............ditto if they plummet?

Have a plan and stick to it.........because "Failing to plan........is planning to fail."


Respectfully,
Playacaribe2

 

[johne]

Yes, but not that many, most are in the energy space. Brookfield (BPY) is the only one I am familiar with in real estate.

I have previously held two MLP’s, one now having changed structure and the other still trading. Both were suggested to me by a friend and well known mutual fund manager. Both were successful investments for me, but at least in my case at the time, did not provide what I would consider as game changing tax savings.

Every investor, before they invest in anything, DR bonds or otherwise, and we all are investors in one way shape or firm, needs to evaluate their personal goals, their time line horizon, and their risk tolerance before plunging headlong into any investment…….and then be prepared to continually watch that investment to make sure it is meeting those goals and yes be prepared that not all will work out for the positive and then be prepared to either accept those losses and move on or double down and wait if your conviction warrants.

The old investing axiom rings true, there is a season for all investments, but not an investment for all seasons.


Respectfully,
Playacaribe2

I learned real fast after being told I needed to write a very large check to the IRS for my "gains" in '20 and '21. Sure they were great with 10-12% yields that were perfecly timed by my financial guy. But when I sat down to write the check I asked what are we going to do about this in the future? Exactly what PC2 says about the end game. What is the plan??
Thats when I got my education on statergies. Spot on.