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<< I've just gotten into investing and I'm planning to buy into stocks shortly. What I was wondering was
whether there was a best time to invest. I've heard that investing at the end of the year is bad from a
tax standpoint. Is this true? Is this only for dividend paying stocks? I'd appreciate any help. Thanks.>>

Well, it really depends upon the type of investment. But what you might have heard has to do with buying mutual funds near the end of the year.

Mutual funds are required to distribute most of their realized gains to shareholders of record at least once per year. In many cases, this record date is near the end of the year. If you invest prior to the record date, you could get hit with a large capital gain distribution from the mutual fund...which would be taxable on your 1997 tax return. You didn't really make those gains, but you are required to report them. And while the net asset value (NAV) of the mutual fund will generally decline after the dividend declaration, people don't usually buy a mutual fund just to turn around and sell it to offset their distributed capital gains.

So this could be a problem.

But the good news is that before you invest in any of these mutual funds, you can CALL the fund and find out about the dividend date, and see if you are now beyond that date. If so, no problem. If not, you might want to wait until after the dividend is declared.

Hope this helps...
TMF Taxes
Roy
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