Why Capital Gains Hurt Small Investors

It’s that time of the year again when mutual funds start   bragging declaring their capital gains.

On the surface they’d have you believe how wonderful their gurus have performed in the calendar year.

However, a look behind the scenes shows you how most investors get screwed by these “so called” gurus.

First, let’s set the stage for their fraudulent claims by illustrating a year-over year comparison as opposed to how well they’ve done since the beginning of 2019.

They’ll be the first to tell you how their genius moves in the markets have given you 15% or even 20% year-to-date return.

This is the beginning of the lie.

Let’s say you bought a fund last October.

In November and December 2018, you saw your investment get bludgeoned while the boyz in the “Club” set up their year-end bonuses via huge trading volume.

When you compare the value today with last October, you’ll see that your investment is either flat or down.  (example: The DOW hit its all-time high last October of 26,818.  Today it’s virtually unchanged.)

Pay attention, because here’s where it gets tricky…

Since January, most funds have performed exceptionally well which reinforces the mutual funds claim of Year-to-Date returns.

So, now they’ll reward you with “Capital Gains” (taxable to you) but your account value is virtually unchanged.

Huh?

Adding insult to injury, if you bought the fund last year, you probably paid taxes on the capital gains from 2018 which – up until November – was a very good year.

Unfortunately, your value on December 31 was probably down 15-20%.

Check your statements and see.

These are just a few of the many ways Wall Street screws you while lining their pockets at your expense.

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