Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
<Hiya.. Im a new investor.. only 25. I make aprox 30k.. near 40k with overtime :) I want to invest in a company I think will be BOOMING within 4 years..<Loral space communications> but I dont wanna buy the stock for 16 now and then when it goes to $100 a share I lose 30k in taxes when I cash out. Id like to cash out in aprox 5 years and put the money towards a new house or condo. What do I do?
How can I protect my money from being bombed by taxes? I know I will definately need the money in aprox 5 years.
I read the new tax laws, im so confused my head is going to explode, please help :) >

First thing to do is go to the Motley Fool home page and read the 13 Steps. Also read the Motley Fool's Investment Guide, available from the FoolMart or your local deep-discount book store. (The millenium will have arrived when the full-service brokers really provide full service and hand out free copies of the book, as they now do with the S&P stock guide.)

The main trouble with the advice I have given is that the MF deals mainly with long-term investing. And 5-years is at the bottom end of what they consider to be long-term. If you are willing to risk it a little, I would suggest investing in the Foolish Four or UV4* portfolio. Since you are young and in it only for the short-term (so-to-speak), I would seriously avoid the UG approaches and using an IRA (which avoids taxes, in a way, but not suitable for withdrawals until you are 59 1/2). If possible, invest the money you will need in the next few years in something relatively safe, such as a money market, and try to invest something in a longer-term IRA or 401(k), realizing that you cannot take the money out before 59 1/2 except in unusual circumstances.

Bear in mind that if you end up paying high capital gains taxes, it is because you made high capital gains. For every $1 you pay the IRS in capital gains tax, you get $4 of your own, if you held the stock over 18 months.
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement