Frugal Village Forums banner

1 - 3 of 3 Posts

·
Registered
Joined
·
6 Posts
Discussion Starter #1
I am not eligible for IRA's. I am wondering about Capital Gains in a Taxable Account. I am considering investing $10K in S&P 500 Index Funds with a buy and hold strategy through the decades. As long as I don't sell, are there a lot of tax implications if the market goes up? In other words, if the market goes up for the year, and it goes to $12K, does that increase my tax burden for that year if the funds remain invested?
 

·
Registered
Joined
·
423 Posts
and it goes to $12K, does that increase my tax burden for that year if the funds remain invested?
You pay annual tax on the dividend (very small) but the main increase is tax-deferred until you sell. Then the max rate is 15% on your profit. Or, if you leave it to heirs, the tax is never due.

Historically, the SP500 doubles about every 7 years - eg, $10k, $20k in 7y, $40k in 14y, $80k in 21y, and so on.
 

·
Registered
Joined
·
6 Posts
Discussion Starter #3
Thanks Old Guy. Is it best to start a brokerage account at the beginning of the year in January? I heard that the dividends are produced in November and December annually.

I am thinking of starting one with $10K, contributing to it monthly, and staying the course through the years. I appreciate the advise. Some years it will be up, some years it will be down, but to your point, ultimately, it will climb.
 
1 - 3 of 3 Posts
Top