Every December, Capital Gains Distributions are announced for mutual funds and index funds. This happens whether the market is up or down. In a strong market, investors may be more prepared to be hit with a tax bill. But in a market like we've seen in 2022, this may be more of a shock to the system. Today, Amy Walls from Thimbleberry Financial breaks it all down.
First, Amy explains the difference between a mutual fund and an index fund, with a clever fruit salad analogy.
Next, we walk through the differences between capital gains and capital losses, as well as short-term vs. long-term. Investors don't control the trading inside a fund, so they have no control over what's a capital gain inside it.
We close with a business analogy to better explain the situation.
If you have questions about anything related to your financial future, reach out to Amy Walls and the team at Thimbleberry Financial at https://thimbleberryfinancial.com/
Or give them a call at 503-610-6510