Understanding the impact of inflation and taxes on investments from "summary" of Rule #1 by Phil Town
When it comes to investing, it's crucial to consider the impact of inflation and taxes on your investments. Inflation refers to the general increase in prices of goods and services over time, which erodes the purchasing power of your money. If your investment returns do not outpace inflation, you could actually be losing money in real terms. Taxes are another important factor to consider when investing. Depending on the type of investment and how long you hold it, you may be subject to various taxes such as capital gains tax, dividend tax, or interest income tax. Failing to account for taxes can significantly reduce your overall returns. To co...
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