Q. I have an investment that has appreciated a lot over the past year, if I sell it now, I will have a large capital gain tax bill. Should I hold it as long as I could?
A. While it sounds like a good idea, unfortunately numbers have shown that holding an investment for the sake of dodging the capital gain tax bullet is not going to help you much, this article explains it in great details -
Are The Tax Deferral Benefits Of Low Turnover Investment Strategies Overstated?
Put it short, in the above article, the author used solid numbers to illustrate the following key points:
A. While it sounds like a good idea, unfortunately numbers have shown that holding an investment for the sake of dodging the capital gain tax bullet is not going to help you much, this article explains it in great details -
Are The Tax Deferral Benefits Of Low Turnover Investment Strategies Overstated?
Put it short, in the above article, the author used solid numbers to illustrate the following key points:
- There is remarkably little value to reducing portfolio turnover, unless it can be reduced all the way to zero (which is impossible)!
- The presence of even the most modest of turnover - a portfolio that is changed only once a decade - forfeits over half the benefit of tax deferral, reduced even further by the presence of dividends.
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