Hacker News new | ask | show | jobs
by sks 3648 days ago
You dont get taxed until you sell. The performance shown here is for a buy and hold strategy.
2 comments

Dividends are also taxed, so even reinvesting has a cost.

Granted, IRA/401k etc exist and in years with 0-3% it's not that big a deal, but over 20 years it's often a significant cost.

Dividends are not taxed in tax-deferred accounts like IRA/401(k).
Yes, that's why I mentioned them. Sorry, if I was not clear, though they also generally have associated fees. So again, nominal breakeven is not the same as actual breakeven.
> Dividends are not taxed in tax-deferred accounts like IRA/401(k)

Only if you never withdraw them.

No, you do get taxed on dividends.
You do, but that's why dividends are becoming increasingly rare in the stock market. Many firms are preferring buybacks instead, which cause a pop in the stock price for remaining stockholders and so get taxed as capital gains.
Qualified dividends (which is most of them) are also taxed at long-term capital gains rates.

https://en.wikipedia.org/wiki/Qualified_dividend

I don't believe "dividends are becoming increasingly rare in the stock market". One measure of that is to compare the S&P 500 yield with treasury yield, the latter being near a historic low, but the S&P yield near a consistent 2% for over a decade, and quite attractive now relative to treasuries.

http://avondaleam.com/sp-500-dividend-vs-10-year-treasury-yi...