Lux Investing

Is it worth investing $30K in mutual fund this late in the yr to avoid capital gain tax?

I have close to $30K to invest. But my concern is that mutual fund will have large capital gain tax this year with the market doing so well. I am concerned about paying large sum to Uncle sam in capital gain tax. Should I wait til Jan. 2007?

Public Comments

1. SEEK a financial advisor that works on a flat fee only pay scale. Do not get advice from a commissioned sales person. Make sure they are FEE-ONLY.. check out NAPFA.org And please don't ask for financial advice from "internet srangers"
2. Absolutely wait unless going into a retirement acct like an IRA. Can park it in Reit stocks or short term bonds in mean time.
3. Most funds pay out the CG's on or around Dec 15th. So you may invest after that date and not pay any CG's. You should be able to find out now if a fund will pay out a gain. IMO all financial advisers get paid for their advice somehow. Find one you trust and invest.
4. That certainly is a concern. There are a couple of ways to avoid this. One is to invest in a mutual fund that does not ordinarily have a great amount of realized captial gains. Another is to invest in an index fund, which by definition should have very little realized capital gains.
5. All of these are pretty good suggestions, but what you really should do is go to the company's website and look and see if they've given any indication of how much of a gain they are going to pay out and when they anticipate doing it. They may not have an exact number to give you, but should indicate a percentage. If the fund you're considering investing in isn't paying a gain, then that should answer your question. Keep your eye on the markets as well. Although you may not want to pay a capital gain tax, you also don't want to miss a big market move to save a couple hundred bucks. We are entering a historically good time for the market, you could very well miss six to eight weeks of it (including the so-called Santa rally). The early bird catches the worm! Check the fund company's website and then make your decision.