The IRS Is Taxing Investment Gains You Never Really Made

Inflation can make an investment account look far healthier than it really is. Once taxes are added, investors may discover that a significant portion of their apparent profit never increased their purchasing power at all.The Hidden Tax Inside a Long-Term GainConsider an investor who puts $10,000 into a stock, earns 10% annually and sells after 20 years.The investment grows to approximately $67,275, producing a taxable capital gain of $57,275.That sounds like an exceptional result. Yet if inflation averaged 3% during those two decades, nearly half of the gain would reflect rising prices rather than a true increase in purchasing power.Compounding...