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My mom (age 56) would like advice on the best way to invest the money and protect herself from getting slammed with taxes.

Probably the best way to keep her taxes down is to day trade. From what I've read about most day traders' success, she should be able to lose all of it in not too terribly long and have $3,000 in capital loss carryovers to apply to each year's return for a long time.

The point here is that the goal of investing is to make money, and the more money you make, the more taxes you'll pay. Tell her not to get so fixated on taxes that she makes lousy investments. (Did I hear someone say "annuity"?)

Long-term capital gains are taxed at a lower rate than other income, and you don't pay tax on your gains until you realize them by selling the underlying investment. Mutual funds are treated differently with respect to their distributions. You can read all about this in the Investment Issues section of the FAQ.

Phil Marti
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