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Investment strategy - tax implications

  • 11-08-2021 9:26pm
    #1
    Registered Users Posts: 588 ✭✭✭ transylman


    Considering that we have a capital gains rate of 33%, is there a good or optimal strategy for buying and selling shares?

    Asking because I bought some Moderna at $107 and sold off half my position at $475 when it looked like it was getting ahead of itself. It is now 382, but when I looked at the tax I would be paying, it would have to drop to around $350 for me to break even if I was going to buy back in again with the tax I am paying.

    With 33% capital gains, it seems unless you are ridiculusly lucky the only way to come close to matching an ETF return would be to buy and hold shares long term.



Comments

  • Registered Users Posts: 2,232 ✭✭✭ massdebater


    Yeah if you plan to continuously buy and sell into the same shares, the only real winner there is the taxman, unless it's a very volatile asset and you get lucky. Buy and hold is generally a better long term strategy.



  • Registered Users Posts: 23,323 ✭✭✭✭ Peregrinus


    Even without capital gains, unless you are ridiculously lucky the only way to come close to matching an ETF return would be to buy and hold shares long term. That, after all, is pretty much what ETFs seek to do; to replicate the return you would get from buying and holding shares long-term. Since a strategy of active trading has higher frictional costs than a buy-and-hold strategy, on average the net return from active trading should be lower, so the expected return from active trading is lower than the expected return from investing in ETFs While some will get luck and beat the average, by definition only a minority of market players can beat the market. And only a minority of that minority will beat it by enough to outperform the ETFs.



  • Registered Users Posts: 3,054 ✭✭✭ Static M.e.


    From listening to some US podcasts, there seems to be a big push in the US for registered investment advisors firms to take on tax consultants as part of their offerings to clients. I can see that catching on here, if Davy's etc. don't already provide that service.



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