FAQs for the Premium and Founder's Club Portfolios

I will expand this as more questions come in. More sensitive Q&A will be behind the paywall on this page.

Astute Investor’s Calculus Paid members have 4 different portfolios available to them, depending on whether they have the Premium membership or the Founder’s Club membership.

Premium Portfolio is here and Founder’s Club Exclusive Portfolios are here.

All of these only apply if you choose to mirror my portfolio. You can just take my research and make your own portfolio if you wish. Please consult an investment advisor, and for any answers related to taxes, please consult a tax advisor.

1) How to divide your 4 portfolios between retirement(IRA) and non-retirement accounts?

I would say it is your choice. None of the portfolios involve frequent selling. I will break it down as follows:

1. Main AIC value portfolio (Premium) - occasional rebalance and some dividends. Mainly capital gains. Sales will probably occur on a monthly basis if you do monthly rebalance but only for a small portion of the holdings. Occasionally we may exit a position completely and that will generate capital gains. Hopefully, most of it will be long-term as that is our investment style.

You may want to use an IRA for this as this keeps things simple. I have mine in a Roth IRA. If you use a taxable account, make sure you do not need to dip into it as that will interrupt compounding.

2. Dividend Fortress (Founder’s Club Exclusive) - very few sales, generally none. Dividends will be mostly qualified so it depends on your tax situation but I think it is okay to keep it in a taxable account. Mine is taxable.

3. Core Dynamic Hedge (Founder’s Club Exclusive) - Probably once a month rebalance, but should be minor as you can do Smart Buy in Fidelity Basket when you reinvest dividends or add new money and it should rebalance by allocating new money in under allocated funds so selling is minimized. Taxable is good. Mine is taxable.

4. Rapid Wealth Compounder (Founder’s Club Exclusive) - This one is a little tricky. This will generate significant amounts of cash income, most of which will be un-qualified. Therefore I would recommend a retirement account. However, I may also buy Master Limited Partnerships and Royalty Trusts in the future and they complicate tax filings when these are in the retirement account.

Personally, I have kept it as taxable because I tend to view this as an "income replacement" and therefore if it receives the same tax treatment as a regular income, it is probably something I can live with. If you choose to use a retirement account, you can just avoid buying any MLPs or Royalty Trusts if I recommend some in the future. Today there is none of these in the portfolio.

Another thing to consider, some of the income may be characterized as a return of capital. This portion of the income is not taxable, but if you keep it in a traditional retirement account, you may end up paying taxes on it when you withdraw.

2) Can I go ahead and start filling up the 3 new FC portfolios in the next few days without worrying about the point of entry?

Yes, you should not have to worry about the point of entry. These are pretty much buy-and-hold.

3) If any ETF sells a stock - does the ETF holder need to pay capital gains tax(just like what happens with mutual funds)? I am trying to figure out if it is best to buy ETFs in retirement or non-retirement accounts.

No. ETFs are treated similarly to stocks. Of course, I am not a tax advisor :)

4) What turnover rate do you expect for the Dividend Fortress portfolio?  If it is low turnover, I am guessing non retirement accounts should be fine as it is only dividends that will be taxed mostly due to low turnover.

Very little unless one of the companies cuts dividends or something drastic like that, and we sell that position and replace it with a new one.

5) Is it OK to have all 4 portfolios at Fidelity? I like their basket concept which can automate rebalance but keeping all capital at one brokerage is a good idea?

I have all my portfolios at Fidelity and I have no concerns. Baskets work very well. However, I may decide to move out of the baskets for the main Value portfolio because we are starting to add a lot of small caps where we will have to start doing limit orders. Fidelity baskets only do market orders. It is fine for the other 3 portfolios.