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Glossary entry · The silent subtractors
Capital gains tax
Definition
The tax charged on the profit (capital gain) when you sell an investment for more than you paid for it. Rates vary by country and by holding period — many countries tax long-term gains (held over a year) at lower rates than short-term ones, to incentivize patient investing.
Example
In Spain, capital gains are taxed at 19-28% depending on the amount. In the US, long-term gains are 0-20% federally.
Related
The silent subtractors
Fee
A charge taken from your investment by a fund, broker, or advisor — every year, forever.
Read →Tax
The other silent subtractor. Almost every gain you make is taxed somewhere.
Read →Expense ratio
The annual fee a fund charges, expressed as a percentage of your investment.
Read →Commission
A fee charged by a broker each time you buy or sell. Mostly $0 with modern brokers.
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