Whether you are investing in shares or Forex your main gains will be capital appreciation: The investor in this category is not interested in dividends but in seeing the market price of his stock increase or one currency improving against another.
There are three advantages to this kind of operation. First, if your judgment has been good, you make more money faster than by relying on dividends. For example, the man who buys 100 shares at $30 and sells even at a 10-point profit has $1,000 (less commissions) to show for his year’s work. This represents nearly seven years’ worth of dividends from the $30 stock yielding a conventional 5 per cent.
Secondly, if you hold your investment for more than six months, your profit is considered a long-term capital gain, taxable at a maximum 25 per cent rate for many people, a saving over straight-income rates.
Finally, if your stock doesn’t go up as anticipated, there is always the chance that it will at least be a decent income-producer.
This is something of a rationalization, of course. There is no use pretending to be in the capital-appreciation business if a little mess of dividends is all...
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