Message Font: Serif | Sans-Serif
 
No. of Recommendations: 3
yunyun,

First off, thanks for coming to the discussion board to ask your question. We all get smarter by asking questions, and being a teenager gives you a huge advantage in the investing game.

To answer your question, the tax man will take your money on two primary events: 1) when you receive a dividend and 2) when you sell stock, obviously in a taxable account.

Here's a link to how tax brackets and rates break down: https://turbotax.intuit.com/tax-tools/tax-tips/Investments-a...

Bottom line on that is that if you hold for more than a year, the tax rate meaningfully drops.

There are accounts that are not taxed, but that pretty much relates to retirement accounts (Roth IRAs and 401-Ks). Others probably know those details and other potential options better than I do.

That said, there is one little secret that the masses tend to forget. If you buy and hold for a long time you delay paying taxes. The more you buy and sell (the trader mentality) the more in taxes you will pay. The less frequently you sell, the investment percentage hacked off by taxes meaningfully decreases -- especially when extrapolated over the course of many years. Time is our friend, and the younger the investor, the better -- so consider yourself in luck.

Hope that helps! Feel free to stick around and ask any question you have.

Aaron
Print the post  

Announcements

Paying For School Guide
Trying to Tackle Tuition? The Motley Fool's Guide to Paying for School will help you fight those rising education costs.
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.