As we discuss in another session, taxes are one constraint to consider when building a portfolio. Taxes are also one quantifiable advantage of long-term investing.
There has always been an advantage to holding stocks long term, but the tax law changes in 1997 made that edge even sharper. Long-term investors, defined as those who hold a stock longer than one year, now enjoy a capital-gains tax rate of 20%. Short-term traders have their gains taxed at 28%. That may not sound like much of a difference, but it is.
The Toll Taxes Can Take >>