This is wrong. Whatever your Account Balances screen says, your current worth is exactly that minus about 20%.
This is a vast oversimplification, and just as "wrong" as any other all purpose tax advice one might receive. There are many scenarios which will allow you to ultimately avoid the tax bite. The easiest way to do it is to die before the shares are sold, which will allow your heirs to get the stock with the cost basis that applies on your date of death. For those who don't feel quite this strongly about avoiding taxes, there are other options such as donating stock to charity, setting up trusts, etc., none of which should be undertaken without competent advice.
Furthermore, if you sell now and then reinvest the net amount you will end up with a smaller amount invested. Due to the power of compounding, this can have profound effects over a time frame of 10 years or more. All other things being equal, this would be a wash because you'd pay taxes on the higher amount when you did liquidate your portfolio. However, all other things are rarely equal. And, if all other things are equal, it is better to pay taxes later rather than sooner anyway.
Hope this isn't going to turn into one of those tax strategy spitting contests that tend to break out this time of year. I'll gladly stipulate that I don't know what the heck I'm talking about when it comes to taxes as long as everyone else does the same <g>. |
