Now that we have established how to choose a brokerage firm, let’s take a look at the different types of accounts most brokerage firm’s offer, and which one is a better fit for you and your investment objectives.
- Taxable Accounts: these types of accounts are typically individual or joint accounts, but can also include custodial, trust, and estate accounts. They are labeled “taxable accounts” because any gains earned in the account are subject to a federal tax. Any interest earned in a given year exceeding $10 will be taxed as income. Dividends paid in the account are also subject to be taxed. Capital gains, however, must be realized in order to be taxed. What does “realized” mean? Well, when an investment appreciates in value, it is considered an unrealized gain because you have not sold the investment, thus it can still lose value or continue appreciating. Thus an unrealized gain cannot be taxed since its value can still fluctuate up or down. Once a stock is sold however, a taxable event has occurred.
No comments:
Post a Comment