Hey, I was right then, now I am getting bold, lol.
I agree with you idea to pay off a credit card before investing in stock. You would have to make like 20%+ just to break even on the interest that the credit card company would be charging you, so good call.
1) No, you can buy as many or few shares as you choose. Each transaction is going to cost you $7.00, but it don't matter the amount of shares. Once the stock value is below $1.00, they charge you $7 + 1/2% of the amount. (If you buy 1000 shares at $.50 the cost Scottrade will charge is $9.50 { $7 plus 500 (1000 X $.50) X 1/2% (which =$2.50)})
2A) Right, you don't pay tax because there is no true gain realized until you sell or recieve dividends.
2B)
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If I sell the stock before 1 year, I will pay a higher tax rate. If I sell after 1 year, I will pay a lower tax rate
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I am pretty sure you are right here. Reason being you pay at ordinary income tax rate if sold before one year. If sold after, you are tax at long-term capital gains rate. The second part depends on what type of account you have. If it is in some type of tax defered retirement plan, then no. If it is a regular trading account, then the broker will send you a year end statement letting you know what you have to pay tax on.
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And if I do need to pay tax on a sale of a stock, should I not include this into my trading by including price of stock, fees, and tax to understand my overall profit and breakeven point? At the end of the year, what would I need to present for tax purposes?
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^ Not sure if I follow you on this, but I would definetly keep track of all your expenses in order to understand if you are really making money. And for tax purposes, I am pretty sure that your broker will send you all the information that you need at the end of the year.
Also, here is a link to an article that I found. You had me questioning myself on a couple of these, so I had to learn myself, which is good so thank you.
Action now could take chunk out of your tax bill later - USATODAY.com
Have a good one,
Mark