Save on your trading losses
Investment can incur losses and you need to have a way out to beat those losses. This is important if you desire to secure your savings. The loss deductions originating from the net trading losses can be creatively invested.
Here are three basic options:
You can go for the S&P futures – Once you own an S&P 500 Index fund, the 2.5% yield is sure to benefit you. With Obama planning to raise the dividend tax by just 20%, the investor will be able to effectively secure his savings. It is usually noticed that the stock yields are higher compared to the short-term interest rates. If the Treasury’s yield 0.5%, the stocks yield 2.5%, the futures offer you 2% annualized discount to the spot price. For you, the capital gains will be tax-free.
Go for the Short Treasury Bonds – If you’ve suffered trading loss, the investment income will be tax-exempt. The interest rate that is currently 0% for you will rise as the bond matures. Here, you need to take investment advice from an investment broker. It is advisable to lock the bond with a term-purchase agreement.
Exit the bonds prior to the dividend – Once you redeem the bond before the stipulated date, a good section of your interest incomes can be converted to capital gain. If you are tax-deferred, the distribution of your taxable income need not bother you.
Written by srini on September 13th, 2009 with
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