As an investor in a mutual fund, you become a shareholder in a large portfolio of stocks, bonds and/or money market securities (or some combination of them). Investing in stocks and bonds can be a good way to achieve long-term capital growth, but the market risk can be substantial. Consider subscribing to financial magazine or taking a course to learn more about these options.
Although investments in mutual funds, stocks and bonds provide no current tax benefit, qualified dividends and capital gain distributions are taxed at a maximum rate of 15% and your other income is taxed at a maximum rate of 35%. For 2009 and 2010 these amounts are taxed at a 0% rate to the extent your taxable income is below the end of the 15% bracket.
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This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.