It’s been quite a bull run for stocks, and the benefits are many for those who have been heavily invested in the stock market these last seven years.1 However, there is a downside to such a run, taxes on capital gains distributions.
Over the past several years, the amount of capital gains has steadily increased, and the increase will likely continue as long as the stock market continues to rally. This leads investors to wonder what they can do to decrease their tax burden.
Before we talk about possible strategies, let’s take a look at the situation.
After several years of gains, funds began making payouts, just small payouts at first and gradually larger and larger percentages per share. These payouts qualify as taxable gains, and as such, they are taxable. Additionally, payouts lead to outflows when what you really want to do is preserve your capital. Capital gains don’t often fit into investors’ long-term wealth strategies, so it’s wise to know what other options are available to you.
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