WHAT I LEARNED FROM FILING THIS YEAR'S TAXES

Just finished filing my taxes for 2011 and am happy to be getting a small refund.  I like to use tax time as a way to judge how effectively I've managed my money for the previous year and try to figure out ways to come out better, the next time around.  This year I noticed a couple of things I could have done better. 

First and foremost, I should have contributed about twice as much to my IRA account.  Doing so would have eliminated my tax liability and I would have gotten back everything I paid in Federal and State tax for the past year.  This might sound like a no brainer but it's something I overlooked on last years' returns.

Another thing I learned is how much more paperwork, or at least data entry, is involved when you sell shares in which you've recently re invested dividends.  For capital gains and cost basis purposes, each dividend is treated as a separate stock purchase date and has to be reported as such.  So for the sale of one lot of stock, if that lot includes shares purchased through re invested dividends, you may have several taxable events.  It would seem much simpler to take dividend payments in cash until you've accumulated substantial amounts and then re invest the money.  Doing so will make tax preparation much simpler if you decide to sell later on.  However, money wise, it's still better to reinvest the dividends as they're paid.

TIME TO REVIEW INVESTMENT PLAN

Started the new year off right with dividends from Westar Energy (WR), Glaxo Smith Klein (GSK) and Reynolds American International (RAI).  There is a lot of uncertainty going into earnings season with efforts to shore up the Euro, so not really sure where the market is headed.  The jobs report gave us a little boost, but I wouldn't count on that to last long. 

January is the month I usually review my investment plan and make any revisions I think necessary.  Also working on getting all my tax paperwork together to file my income taxes.  Will probably get a small refund this year, which I plan to invest solely in my taxable account to build monthly cash flow.  I invest in my taxable account and my IRA every month but I look forward to these small windfalls from tax refunds to give my portfolio a boost.

DIVIDENDS AND INTEREST FOR MY RETIREMENT ACCOUNT

Collected the first FDIC insured interest payment on the cash balance in my IRA account.  My investment company started offering the FDIC account option since money market rates have been so pitiful and I signed up for it right away.  As expected, the payment was nothing to get excited about, but it's that much more than I had.

Also collected dividends from SPY and CPB.  Reinvested the dividend in Campbell's Soup and kept the cash from SPY.  I believe these are the last two payments I'll get for the month of October.  Looking forward to the payouts in November from my holdings in energy limited partnerships.  I sold a large portion of my holdings in the partnerships to reduce exposure and collect on some of the capital gains, almost wish I'd held on to a few more units.  The cash payouts have been great!!!  But that's water under the bridge.  Don't plan on selling my remaining shares/units.  As it stands, I have taken all my initial investment, plus a substantial profit out of the 3 energy partnerships I have left.  So anything I collect now is icing on the cake.

HAPPY INDEPENDENCE DAY!!!

Wanted to wish everyone a Happy Independence Day weekend!  Friday is the start of the holiday weekend, although I have to work Friday and Saturday.  Looks to be a busy weekend for us at work, but I'm looking forward to shopping the 4th of July sales on Sunday and Monday. 

We've had a great few days with the stock market, July is coming in with a bang (pun intended), but I don't look for it to last.  So I'll be looking to get some deals on stock purchases in the month of July.  My first stock purchase for my IRA account will be Kraft Foods (KFT).  You already know the name and most likely, like myself, use a lot of their products.  Their dividend payout is a little over 3%, so they should make a great long term addition to my retirement account.  At the very least I've got 8 1/2 years before I can start taking distributions from the account, so I'm looking to add only stocks I feel comfortable holding for that length of time.  Kraft is definitely one of those stocks. 

Hope everyone has a happy and safe holiday weekend!