Taxing Profit Investment Firms

by David Jenyns on June 29, 2009

Investment firms are taxed in a rather peculiar and arcane manner. The firm must report to its shareholders the nature of payments (interest and/or capital gains), and the investor will be taxed upon these profits according to his tax bracket.

That the performance of the investment firms would be subjected to various degrees of criticism is not difficult to understand. Comparison of fund performance with various stock indexes, such as the Standard & Poor, have been made and have shown striking results in the case of some funds and rather mediocre performances for others. One does not rush blindly into the purchase of investment-firm shares any more than a prudent man would rush to buy the stock of newly formed XYZ Electronics Firm. Time is of the essence when exploring funds in which to invest: longstanding funds with records of good integrity should be considered far above the new kid on the block funds with flashy marketing schemes and fast-talking salesmen.

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