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While true, you are taxed at different rates for different holding periods. If you hold for < 1 year, that is a short term capital gain, and is taxed at your or
by darawk 10y ago
While true, you are taxed at different rates for different holding periods. If you hold for < 1 year, that is a short term capital gain, and is taxed at your ordinary income rate (~35%, let's say). If you hold for > 1 year, your gain is taxed at 15%.
- wahern 10y agoSure. But there's always a gain, regardless. The riddle was why would you be worse off holding rather than selling. Anyhow, if we grant the riddle was poorly worded, that the implication was waiting an additional day you're be better off, it's still technically incorrect. The clock starts ticking the day after the purchase, and you have to hold for a year and a day. If you purchase on May 3 2016 you shouldn't sell before May 5 2017. Possibly May 4 or even May 3 if I'm misunderstanding something, but almost certainly not May 2.
- darawk 10y ago> Sure. But there's always a gain, regardless. Not true. Suppose you buy a stock for $5 on Jan 1 2016. It rises to $20 on Jan 1 2016. If you sell on Jan 1, you make 15x.65 9.75. If you hold until Jan 2 and the price declines by $1 to $19, you make 14x.85=11.9. Hence, you're better off holding till the next day, even though the stock goes down.