Without any doubt, foreign currency trading definitely lets you have just the best of both worlds. Thus when stock prices actually go up, then you are able to benefit from this kind of trading. Besides, when stock prices clearly go down, then you are able to profit from foreign currency trading. In fact, when inflation obviously goes up, then you are able to profit from this type of trading. But when inflation actually goes down, then you are able to profit from currency trading. And quite similarly, interest rates can also go down or up, but still you are going to profit from foreign exchange.
Well, it is necessary for you to pay so called capital gains tax for every your investment in any financial market. And so capital gains are going to be considered short term if it is definitely less than one single year. But short term gains are really taxed at your present tax rate. Thus if you actually hold the security for even more than this one year before you take your profit, then you are going to need to so called pay long term capital gains tax. And this kind of gain is taxed at the rate of just fifty per cent.
However, if you clearly invest in the modern forex market, then sixty per cent of your real profits are going to be taxed as long term gains and just forty per cent are going to be taxed as short term gains, no matter whether you clearly hold some foreign currency for only one single minute, one week, one hour and so on. In addition, let’s take a look at one example. In fact, let’s suppose that you invest ten thousand dollars in stocks and just the same amount of money in forex trading. Thus your tax bracket is more than thirty per cent. Besides, let’s also suppose that you really made a good profit of this sum of money in both forex and stocks in only half a year.
For sure, your profit is going to be treated as so called short term gain, because your stock investment was certainly less than one year. Well, this obviously means that you are going to need to pay your present tax rate of around thirty per cent. And finally, it really doesn’t matter whether you actually took this profit in one year or six months in forex trading, sixty per cent of your profit will surely be treated as so called long term capital gains and also forty per cent will be probably treated as so called short term gains. Without any doubt, tax savings on your forex investment just like that can definitely add up quite fast.
Surely not a single piece of knowledge can be a 100% guarantee against losses, especially on Forex, but sometimes just one Forex books can save you much money.