If you want to invest without increasing
your current income taxes, you may want to concentrate on stocks
and stock
mutual funds
more likely to provide long-term capital
appreciation, or growth in value, than current income.
You
pay no income tax on paper profits — or increases in an investment’s
value while you own it — until you sell the investment and
realize the profit. If you’ve held the investment for more
than a year when you sell, you owe tax on any gain at the long-term
capital gains
rate, which is always lower than your regular income
tax rate.
You
also need a strategy for liquidating investments that have appreciated
in value. One approach is to offset gains on some investments
by selling investments that have dropped in value. That reduces
the amount that’s subject to tax. Another approach, if you
know that tax rates are being reduced, is to delay selling appreciated
assets until the new tax year.
In either case, you’ll want to check
with your tax or investment adviser before you make a final decision.
Gail Dudack,
Managing Director,
Dudack Research Group
You
pay no income tax on paper profits — or increases in an investment’s
value while you own it — until you sell the investment and
realize the profit. If you’ve held the investment for more
than a year when you sell, you owe tax on any gain at the long-term
You
also need a strategy for liquidating investments that have appreciated
in value. One approach is to offset gains on some investments
by selling investments that have dropped in value. That reduces
the amount that’s subject to tax. Another approach, if you
know that tax rates are being reduced, is to delay selling appreciated
assets until the new tax year.
Gail Dudack, 