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General investing and allowing for tax implications

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General investing and allowing for tax implications

I have been a subscriber since the very beginning and have found you reports and research a cut above the rest. Particularly making clear calls on stocks and the market, My question is for an investor who is sitting on a large capital gain, should the implication of paying tax and therefore having less to reinvest ever be a consideration? ie selling say cba shares for a total sum of $100k and paying tax of say $25k and only having $75k to reinvest in WBC for instance??


Hi Peter,

Thanks for your long-term support of Market Matters – we’re chuffed you value the service; it’s certainly evolved and grown over the years! This is really a tax question, so out of our wheelhouse. From a general sense, and using the example you provided, one would need to expect huge outperformance from WBC over CBA to make the trade stack up, although this is clearly an extreme example.

We’re proponents of active management, and this works better in low tax environments, however, we find that focusing too much on tax consequences and not enough on optimizing positioning can be detrimental over the long term.

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