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Be sure and factor in Capital Gains taxes when you invest

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    What a lot of people don't think about when you invest into any stock or digital asset or piece of land, pretty much any asset you own that appreciates in value, is you have to pay taxes on your profits, what's called a Capital Gains tax.

    This was not a fun fact for me to learn, for two reasons. 1) it means your gains are less because you have to factor out taxes. 2) you have to keep track of all your transactions and go through the pain of filing them on your taxes.

    But once you normalize to the reality it's not that big of a deal. Just know there are 2 different kinds of capital gains tax - short term and long term. You pay different %s based on how long you held the asset.

    If you hold an asset for less than 12 months, then you pay a short term capital gains tax, which is equal to the highest tax bracket you fall in. Note you only have to pay taxes on the profits you made.

    For long term, the rates are lower, it's the govt's way of incentivizing you to invest more long term, which is longer than 12 months. And in this situation you can actually pay 0% if you make $40,000/yr or less. If you make more than that it's 15% on profits. (unless you make over $441,451, then it's 20% tax)

    Just a helpful reminder for anyone thinking of investing their stimulus checks into the stock market, or just when you invest in pretty much anything in the future, remember to always calculate (and file and pay) your capital gains tax, and avoid any issues with the IRS.