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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
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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 Back To Top