Tax Risk on Small-cap Stocks

Tax (such as income tax or capital gains tax) don’t affect your stock investment directly. Taxes can obviously affect how much of your money you get to keep. Because the entire point of penny stock investing is to build wealth, you need to understand that taxes take away a portion of the wealth that you are trying to build. Taxes can be risky because if you make the wrong move with your stocks (selling them at the wrong time, for example), you can end up paying higher taxes than you need to. Because tax laws change so frequently, tax risk is part of the risk-versus-return equation as well.

It pays to gain knowledge about how taxes can impact your wealth-building program before you make your investment decisions.

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