Many investors have such questions, do investment funds need to pay taxes, and are all index funds worth our investment? For some questions, here are some simple answers for you, hoping to help you.
When we invest in index funds, we earn two kinds of income:
1. Capital gains: gains from bid ask spreads
2. Dividend income
At present, capital gains are not taxed temporarily, but many mature stock markets have capital gains tax, so it may be levied in the future.
At present, the fund has dividend tax when receiving dividends from constituent shares, but the dividend tax will be exempted when holding constituent shares for a long time. In addition, when the fund distributes dividends to fund holders, this part will not be taxed. That is to say, we do not need to tax when receiving fund dividends.
We all know that there are many types of index funds. At present, the total number of index funds in China is about 500 or 600, and there are two types that we do not need to consider.
Category I: Those with a scale of less than 100 million have the risk of liquidation, which is not considered temporarily;
The second category: some index funds have large tracking errors and have lost the index, which is not considered temporarily.
Considering the above two situations, there are about 200 funds left, which are the main force of our research. However, many of these index funds are duplicated. For example, there are more than 30 A-share index funds tracking the CSI 300 index. These duplicate index funds also need to be removed. After such streamlining, there are probably 60 or 70 major players in our investment.
Among them, we focus on dividend, fundamental, value and low volatility. These four types of strategic index funds, plus excellent industry index funds, are our main investment varieties.
