Tax Myths about Investments

I will mention two myths about investments. First, is the myth of holding on to investments due to fear of capital gains tax. You should never hold an investment that has gone up just for the purpose of avoiding the capital gains tax. As we have seen in the past few years, many investments have gone below the buy-in amount, so make your decision to sell or not on economic factors, not tax factors. Second is the myth of buying investments to lower taxes. Examples are Limited Partnerships, Annuities and Municipal Bonds. You should never purchase an investment for the primary reason that it will benefit you from a tax perspective. Always work with a qualified financial advisor, not a salesman, before buying such investments. They can be great, but also can be prove to be disadvantageous.