October 27, 2013

What is a capital gain? What defines a short term from a long term capital gain? Which type should you reach for? Why?

2 thoughts on “October 27, 2013”

  1. Katherine Graham says:

    A capital gain is a profit that you get from an asset (stocks, bonds, or real estate) where the amount you get for it when you sell it exceeds the purchase price that you payed. A short-term capital gain is when you hold the asset(s) for a year or less. Long-term capital gain is when you hold it/them for longer than a year. You should reach for long-term capital gains, because patience and time will serve you well.

  2. Mike Finley says:

    Beautifully stated, Katherine. Well done! Let’s recap.

    When you save and invest wisely (no-load index funds) over long periods of time, you will gradually increase your capital gains. This is how wealth is achieved over long periods of time. Focus on buying and holding your assets, which will provide you long term capital gains, which are taxed at a much lower rate than short term capital gains. Buy and hold and ignore the mass media and their predictions. They are wrong more times than they are right.

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