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December 2015 Issue of PFwise.com's Monthly Newsletter
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PFwise.com Monthly Newsletter

Help you make wise personal finance decisions

Hello friends, welcome to the December 2015 PFwise.com Monthly Newsletter!  In this issue, we will discuss year-end fund tax surprises and how to deal with them.

Can you believe that you lost money in a mutual fund but still have to pay capital gain tax?  Yes, it could happen, and sometimes this tax bill could be huge - as high as 30% of your investment!
 
1. What is year-end tax surprise?
In this blogpost, I discussed what is year-end fund tax surprise.  Basically, it is from a fund held in your taxable investment account, you could lose money on paper, never sold a share, but still have to pay for "capital gain" tax to Uncle Sam in the following year.  I shared a website in the blogpost that tracks such fund surprises, in certain extreme cases, an investor could see 30% or even higher NAV distribution!

2. Why the year-end tax surprise?
Most funds would announce their year-end tax surprises around this time of year.  While there could be many reasons cause this tax surprise, this blogpost discussed two main reasons: fund managers' selling activities and change of funds' managers and/or strategies.

3. How to deal with the year-end tax hit?
As an investor, you could have four options once you see this year-end fund tax surprise coming, as described in this blogpost.  More importantly, I discussed two lessons you could learn from this fund tax hit, so you could avoid or minimize its negative impact in the future!

 

Thank you for your readership!  I hope this newsletter makes you aware of the potential year-end fund tax surprises and find effective ways to deal with them!

If you like our newsletter, please share with your friends.  They can subscribe by dropping a line to help@pfwise.com or click here.

The Bottom Line
 
Personal Finance is a broad and complicated topic, and needs lot of knowledge and forward-looking planning.  I hope I can share my knowledge and use my skills to help you make wise PF decisions.

Kaisheng (Kenny) Bao, CFA, MBA
Independent Agent
National Producer Number 16505199
PFwise.com
(571) 482-9394


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