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Short-term capital gains apply to stocks held for one year or less and are taxed at your ordinary income tax rate (10-37%). Long-term capital gains apply to stocks held over one year and are taxed ...
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The wash sale rule prevents you from claiming a tax loss if you buy the same or substantially identical security within 30 days before or after selling at a loss. For example, if you sell Stock XYZ...
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Break-even price = (Total Cost + Transaction Fees + Taxes) / Number of Shares. For example, if you bought 100 shares at $50 with $10 commission ($5,010 total cost) and will pay 15% capital gains ta...
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Cost basis is your original purchase price plus commissions and fees - it determines your taxable gain or loss. If you bought 100 shares at different prices (dollar-cost averaging), the IRS allows ...
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Most states tax capital gains as ordinary income, with rates from 0% (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming) to 13.3% (California top rate). State taxes stack...
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The S&P 500 has averaged about 10% annual returns before inflation (approximately 7% after inflation) over the long term since 1928. However, returns vary significantly year-to-year and by time per...
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Longer time horizons (15+ years) dramatically reduce the risk of loss from stock market volatility. While stocks can lose 30-40% in a single year, no 20-year period has produced negative returns fo...
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Reinvest dividends (DRIP) if you don't need income and have a 10+ year horizon - the compounding effect can add 30-50% to your total returns over decades. Take cash dividends if you're retired, nee...
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Higher potential returns come with higher risk (volatility). Stocks historically return more than bonds (10% vs 5%) but with more volatility (standard deviation of 15-20% vs 5-10%). Diversification...
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Taxes create 'tax drag' that reduces annualized returns by 1-3% in taxable accounts. Holding stocks longer than one year qualifies for lower long-term capital gains rates (0-20% vs 10-37% for short...
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No. A stock split is purely cosmetic - it doesn't change the fundamental value of your investment. You have more (or fewer) shares, but each is worth proportionally less (or more). Your total inves...
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No, stock splits are not taxable events. You only pay capital gains taxes when you sell shares for a profit, and your cost basis adjusts automatically to the split ratio.
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It makes no difference financially. However, historically, stocks often see increased volatility and attention around split announcements. Some studies show modest positive returns post-split due t...
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The dividend per share adjusts proportionally to the split. If you received $2/share before a 2:1 split, you'll receive $1/share after. But with twice as many shares, your total dividend income rem...
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Forward splits increase shares and decrease price (2:1 split = 2x shares at half price). Reverse splits decrease shares and increase price (1:5 split = 1/5 shares at 5x price). Forward splits are u...
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The most widely used stock valuation methods include: 1) Price-to-Earnings (P/E) Ratio - compares stock price to earnings per share, useful for profitable companies. 2) Discounted Cash Flow (DCF) -...
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Valuation results should be interpreted as estimates, not precise figures. Here's how to use them: 1) Compare the calculated fair value to the current market price - if fair value is significantly ...
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Required inputs vary by method, but commonly needed data includes: 1) Financial statements - income statement, balance sheet, and cash flow statement for the past 3-5 years. 2) Current stock price ...
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