Jim:
"I don't trade the IRA anywhere near as often as I do the regular account."
This always cracks me up when I hear it. I too am guilty. Why on earth do we trade in taxable accounts and hold in tax deferreds or exempt? I guess we just like to compound our money at a lower rate after taxes :)
From the 1989 Berkshire Hathaway Chairman's letter:
"Imagine that Berkshire had only $1, which we put in a
security that doubled by yearend and was then sold. Imagine
further that we used the after-tax proceeds to repeat this
process in each of the next 19 years, scoring a double each time. At the end of the 20 years, the 34% capital gains tax that we would have paid on the profits from each sale would have
delivered about $13,000 to the government and we would be left
with about $25,250. Not bad. If, however, we made a single
fantastic investment that itself doubled 20 times during the 20
years, our dollar would grow to $1,048,576. Were we then to cash
out, we would pay a 34% tax of roughly $356,500 and be left with
about $692,000."
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