Monday, September 30, 2019

9 signs you aren't as good at investing as you think you are - No. 3 You don't know how taxes affect your returns

You don't know how taxes affect your returns

The US government doesn't let you have the money you may make investing for free — when you cash in, you'll owe what's called capital gains taxes. Some withdrawals, like those from retirement accounts in some cases, can be taxed as income.
Various factors affect how much you'll have to pay, such as how long you've owned the asset. You'll pay a higher capital gains tax rate on investments you've owned for a shorter amount of time. (There's another reason to invest for the long term.)
"Taxes can greatly impact your investments – both while you are working and in retirement," Eweka explained to Business Insider. "If you are working and have many years until you need to access your money, your taxes and strategy are a lot different than when you are retired and pay taxes as you withdraw money from the returns generated within a workplace retirement plan such as a 403(b) or 401(k)."

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