Query by music: What are the tax implications of investing in the stock marketplace? What are the risks?
I am am 20 and in college, and believed I would invest some funds in the stock marketplace. I am new to stock investing and am arranging to invest a $ 200 1st. How do taxes come into play with stock investing? What organizations should I invest in currently?
Best answer:
Answer by Hubris252
With that little amount of cash it would most likely be very best to find a higher-yield financial savings account and build up your investment capital. Once you have about $ 1000 you can put it into an index fund (modest and mid cap do best in a recovery). When you have about $ 3000 then you can start off getting individual stocks. You want that considerably cash in order to be in a position to have meaningful quantities invested more than a diversified portfolio of five or six individual stocks.
Taxes come in to play when you sell shares, you will have to pay capital gains taxes on any income you make when you sell. How considerably your capital gains tax is depends on what tax bracket you are in. If you very own the stock for much less than a year you spend standard federal revenue taxes on your gains, if you own the stock for above a year then you pay the extended term rate. If you are in the bottom two tax brackets then your long phrase capital gains rate is %, if you are in the top 4 brackets then your lengthy phrase capital gains rate is 15%.
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