An often-overlooked aspect of investing is the management of capital gains. Proper planning around tax gains and loses can make a sizeable difference in the overall return of your investment.

One nice thing about capital gains and losses is that you have some control over them. You can sell your stock now or later, depending on which choice produces better tax results. You can choose which stock to sell and even choose which shares of that stock to sell if you bought shares at different times or different prices. Choose intelligently and you can reduce your tax bite.

You can read more at fairmark.com. Some of the basic concepts include

• deferral - paying taxes later rather than sooner. By selling January 1st, rather than December 31, you can hold on to the capital gains taxes for an extra year.
• avoid short term gains - if you hold your stock for at least a year, the gains are taxed at a reduced rate

There are a few others that are worth checking out. Articles like this really emphasize the holistic approach to investing. As with most things, knowing the rules and being educated can pay big dividends.

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This entry was posted on Tuesday, June 28th, 2005 at 3:07 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.