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Monday, February 18, 2008

other benefits..

Divident income

apart from the appreciation in the price of the shares, dividends declared by the companies to its shareholder also act as a source of income.

Liquidity

share held as investment can be easily converted into cash without any hassels, its takes merely 2-3 working days to realise cash.

Tax benefits

all dividend income is tax free in the hand of shareholders, secondly one need to pay only 10% short term capital gains tax on the profits made from investment in shares if the shares are sold within a year of purchase, and thirdly (most important) you dont need to pay any long term capital gain tax on profits made from sale of shares held for more than a year. the point to be noted here is that the tax rate much higher for other investment instruments- a 30% short term capital gain tax ( assuming you fall in the 30% tax bracket)and a 10% long term capital gains tax.

considering the above facts shares are the best investment options to creat wealth.

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