Capital gains sound super technical, right?

But they're a key part of understanding the stock market. Let's decode it! 🧐

💡 Capital gains = the increase in the value of an investment

Capital gains only apply when the stock is actually sold. 🛍️

Capital gains can be short-term or long-term.

💡Short-term = holding for less than a year.

💡Long-term = holding for more than a year.

Capital gains can be taxed if you make over $44K per year. 🤯

The longer you hold your stocks, the less you are taxed. 🥳

Short-term gains come with a tax based on your income level, so the rate will be similar to your income tax! 💵

Let’s say you buy Tesla at $100 on Jan 1.

It grows to $150 and you sell it on Jan 30. 🤔

Let’s also say your income tax is 10%.

So, your capital gains tax would be 10% of that $50 profit. 🧮

But, let’s say you bought that same Tesla and sold it for the same price, but sold it after a year had passed. ⌛

Since your income tax is 10%, you would get the lowest long-term tax rate of 0%! 🤯

Now you know what to do with capital gains and how to properly make sure you paid taxes on them! 🫡