While Long Term Capital Gains are a new reality, investors should focus on Letting Their Capital Grow. It would be fair to say that as investors, we all prefer tax free investment alternatives. But let’s face it: tax on Long Term Capital Gains is a new reality when it comes to stocks or equity oriented mutual funds.
As long term investors, this should not really be a concern. Success in the equity markets comes to those who invest regularly and hold for the long-term. While this new tax does squeeze returns, it overall does not change the fact that the equity markets still provide tax efficient long-term wealth creation opportunities vis-a-vis other investment avenues.
Don’t let Long Term Capital Gains tax deter you from investing or staying invested in the equity markets. Irrespective of LTCG, given the current downturn in the market, we recommend that this is a good time to invest more and take advantage of a dip in the market. Long term Systematic Investment Plans remain a great way for individuals to gain access to the equity markets at different price points with minimal effort to reduce average purchase cost and to potentially create wealth over time.
While we’ve addressed the long term capital gains tax above, let us remind you that there is no change to the short term capital gains tax. As earlier, it remains at 15% on gains made on sale of stocks or equity mutual funds if the investment was held for less than 12 months.
Market fluctuations do impact stock prices but don’t affect the business fundamentals on which the investments are made. Therefore, STAY INVESTED in the market for the long term and ride the Indian Growth Story.
LET THAT CAPITAL GROW!