Friday, September 16, 2005

Save Taxes with a long term investment focus

While the popularity of Day Trading has fallen dramatically,people will always be on the hunt for stock tips that will provide a quick return. Recent ads on TV for stock picking strategies that follow a repetitive buy-sell channel strategy raises a couple of issues for the uninitiated stock picker looking for a get rich quick buy.

A couple of things to consider are:
Capital Gains tend to be taxed at a higher rate than dividends.

There is a minimum cooling off period that limits your ability to claim a capital loss on stocks that you may have owned within the previous 30 days.

You are taxed when you sell a stock and taxes eat away at the compounding power of your money.

When setting up an investment strategy, be sure to factor in the repetitive capital gains liability you create and the risk of not being able to write off capital losses.

Sit down with your financial advisor and see if a longer term investment focus will provide you with greater returns by lowering your tax liability.


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