Which is the best type of investment for investors who want to reduce the frequency of...
Which is the best type of investment for investors who want to reduce the frequency of their tax liability?
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A : Stocks and bonds: Taxes are paid only when you sell the stock or bond.
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B : Mutual fund: Capital gains taxes are paid only if you sell the fund for a profit.
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C : Stocks and bonds: Tax on capital gains are paid only if you sell for a profit, and taxes are paid on interest received on bonds and dividends received from stock.
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D : Mutual fund: Taxes are paid only when the fund makes distributions.
Homework Answers
Option B is correct
Mutual fund: Capital gains taxes are paid only if you sell the fund for a profit.
In case of stocks, dividends are paid regualrly which incur taxes and in case of bonds, interest payment is paid periodically which also incur taxes.
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