Minimum holding days for return of capital

[mc107]

For qualified dividend, you need to hold at least 61 days to get the dividend and pay the long-term capital gain tax. What about for return of capital? How many days do I need to hold to get the return of capital and pay no taxes?

Thanks,
Jim

 

[bitrend]

It's ok to pay the tax. The primary goal is to have a gain. Trader should concentrate on optimizing gain instead of optimizing tax saving.

 

[mc107]

Quote from bitrend:

It's ok to pay the tax. The primary goal is to have a gain. Trader should concentrate on optimizing gain instead of optimizing tax saving.

If you make 50% a year, but pay 50% of your gain as tax, your net return is 25%. On the other hand, you make 40% a year, but pay only 25% of the gain as tax; you end up with 30% net return a year. The 5% difference will yield significant difference in 10 year period.

 

[bitrend]

That's great to have both. Unfortunately, life is often facing a trade-off. If there is a trade-off between focus on gain and tax, we're better focusing on gain rather than on tax. Did you know some successful traders, presented in the Market Wizards, have said they neither focus on gain nor tax but they focus on playing the game very well.

Quote from mc107:

If you make 50% a year, but pay 50% of your gain as tax, your net return is 25%. On the other hand, you make 40% a year, but pay only 25% of the gain as tax; you end up with 30% net return a year. The 5% difference will yield significant difference in 10 year period.