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Mutual Funds
FYI
Selecting the right investment is critical to the success of any financial plan. In case of mutual funds, this theory holds even greater importance. There are thousands of funds available in the market. Understanding different types of funds that are available would help in making a selection from the lot. That's where I come in!
What is a mutual Fund?
A mutual fund is an investment company that pools the money of many individuals and institutions and invests it on their behalf. Mutual funds can invest in stocks, bonds, options, futures, currencies, money markets, or just about any other security that exists.
Why long-term strategies work to your benefit?
Provisions in the tax law allow you to pay lower capital gains taxes on the sale of assets held more than one year. The maximum long-term capital gains tax rate is currently 15% (0% for individuals in the 10% and 15% tax brackets). Short-term gains those resulting from the sale of assets held for one year or less are still taxed at your highest marginal income tax rate.
While you can make money quickly with a short-term investment strategy, it can entail significantly higher risks. In addition to greater potential risk, there are other disadvantages to short-term investing.
Short-term capital gains are taxed differently than long-term capital gains. Short-term earnings are taxed at your regular federal income tax rate. If, for example, you are in the 28 percent tax bracket, your short-term profits will be taxed at 28 percent. The rates for long-term capital gains are lower.
Holding onto your investments for only a short while can also incur other expenses. For example, you may be charged higher brokerage commission fees. In addition, if you are a speculator, you will have to pay many more transaction costs for all that active trading, thus reducing your returns. Inflation can also be a concern, especially with securities such as short-term bonds.
Call me to schedule a free consultation of your options.
