The financial mess - Phil's Rambling Rants
The financial mess|
Well, there already is such a tweak. It's called the capital gains tax rate. You're much better off owning individual stocks than a mutual fund if you have the time and inclination to pick your own balanced portfolio.
Most of us (including me) simply don't have the time to do the research. So we buy diversified mutual funds and pay someone else to do the research.
Of course, this sort of thing doesn't count for your retirement account, because all of the income from that is going to be taxed at ordinary income rates anyway, so in that case, you may as well buy the mutual funds.
Of course, this sort of thing doesn't count for your retirement account, because all of the income from that is going to be taxed at ordinary income rates anyway
Err, unless you have a Roth IRA, right?
For me, I buy the index funds and let a computer do the picking. But in doing that I am sort of parasitizing the general knowledge of everybody out there who *is* studying companies and picking individual funds.
|Date:||February 27th, 2009 01:14 am (UTC)|| |
I have never owned either mutual funds or pure stocks outside of a retirement account, but I'm under the strong impression that preferential capital gains rates also benefit mutual fund owners. I remember my mom, in years past, talking about having to do a lot of futzing around to figure out exactly *which* shares she was supposed to be selling when she sold some shares in a mutual fund. If she has to worry about which shares she's selling to find a basis value to subtract from the sale price to determine a gain, that certainly seems to be a capital gain, not regular income.
The biggest tax scam in the stock trading business, which mutual funds certainly do pass on to their holders, is being allowed to offset the gains on one stock with the losses on another.