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Wednesday, December 23, 2009

why must i invest in shares

shares are attractive as much for the appreciation in the share prices as for the dividends their companies pay out. Tax advantages: shares appear as the best investment option if you also consider the unbeatable tax benefits that they offer. First, the dividend income is tax-free in the hands of investors. Second, you are required to pay only a 10% short term capital gains tax on the profits made from investments in shares, if you book your profits within a year of making the purchase. Third, you don't need to pay any long-term capital gains tax on the profits if

you sell the shares after holding hem for a period of one year. The capital gains tax rate is much higher for other investment instruments a 30% short-term capital gains tax (assuming that you fall in the 30% tax bracket) and a 10% long-term capital gains tax.

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