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Fiscal Cliff fears got you down? Thinking about selling some of your investments before Uncle Sam cranks up the tax rate on capital gains & dividends?
If so, this article is worth a careful read. Bottom line: Think twice.
The Intelligent Investor: Make the Tax Man Wait! - WSJ.com
If so, this article is worth a careful read. Bottom line: Think twice.
The Intelligent Investor: Make the Tax Man Wait! - WSJ.com
"What really drives the decision is your time horizon," says Douglas Rogers, who specializes in tax-aware investing at Ascensio Asset Management in Lake Barrington, Ill.
The longer you want to stay invested, the higher your anticipated return and the lower the rise you expect in the capital-gains rate, the more inclined you should be to stay put, says David Stein, chief investment officer at Parametric Portfolio Associates in Seattle.
Assuming you earn at least 8% annually, the capital-gains rate rises no higher than to 23.8% and you hold your position for more than five years, you are better off not selling in 2012, Mr. Stein's firm has calculated.
"In many cases," he says, "it makes sense to defer your capital gains into the future even if tax rates do go up."
... [They do discuss a couple reasons that selling could be smart for you] ...
Otherwise, you probably should sell only if you need the cash or you think the investment is overvalued. Don't let Wall Street's latest bogeyman scare you into an unnecessary trade.
The longer you want to stay invested, the higher your anticipated return and the lower the rise you expect in the capital-gains rate, the more inclined you should be to stay put, says David Stein, chief investment officer at Parametric Portfolio Associates in Seattle.
Assuming you earn at least 8% annually, the capital-gains rate rises no higher than to 23.8% and you hold your position for more than five years, you are better off not selling in 2012, Mr. Stein's firm has calculated.
"In many cases," he says, "it makes sense to defer your capital gains into the future even if tax rates do go up."
... [They do discuss a couple reasons that selling could be smart for you] ...
Otherwise, you probably should sell only if you need the cash or you think the investment is overvalued. Don't let Wall Street's latest bogeyman scare you into an unnecessary trade.