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Unlocking Profits: Trading Commodities and Understanding Tax Implications with Billy-Ray Valentine

Join Billy-Ray Valentine as he dives into the world of commodity trading and the crucial tax considerations that traders must navigate. This guide covers the essentials of taxation on unearned income from investments, emphasizing the importance of understanding tax obligations on profit gains. Learn about tax-sheltered investment strategies that can help maximize your trading returns while minimizing tax liabilities. Equip yourself with the knowledge needed to thrive in the commodities market and manage your profits wisely.

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Unlocking Profits: Trading Commodities and Understanding Tax Implications with Billy-Ray Valentine

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Presentation Transcript

  1. Trading Commodities with Billy-Ray Valentine
  2. Taxation Profits earned on investments are unearned income Taxes are often owed on unearned income Taxes are due on most investment returns in the year the unearned income is received
  3. Tax-Sheltered Investments Government tries to encourage certain types of investments by making them tax-sheltered Tax-sheltered investments- eliminate, reduce, defer, or adjust the current year tax liability Tax-sheltered investments are usually not tax-free! Retirement Child/dependent care Education expenses Health care expenses
  4. Employer-Sponsored Investment Accounts Type of tax-sheltered investment Money is automatically taken out of employee’s paycheck Employers often contribute a portion of money to the investment with no additional cost from the employee Example: Employee benefits from having double the amount of money invested! Employer contributes the same amount of money to the employee’s investment account
  5. Rule of 72 Allows a person to easily calculate when the future value of an investment will double the principal amount
  6. Albert “Al” Einstein Credited for discovering the mathematical equation for compounding interest, thus the “Rule of 72.” At 10% interest rate, money doubles every 7.2 years,
  7. What Can the “Rule of 72” Determine? How many years it will take an investment to double at a given interest rate How long it will take debt to double if no payments are made How many times money (or debt) will double in a specific time period The interest rate an investment must earn to double within a specific time period
  8. “Rule of 72” FYI Only an approximation Interest rate must remain constant Interest rate is not converted to a decimal Equation does not allow for additional payments to be made to the original amount Interest earned is reinvested Tax deductions are not included
  9. Doug’s Certificate of Deposit Doug invested $2,500 into a Certificate of Deposit earning a 6.5% interest rate. How long will it take Doug’s investment to double? Invested $2,500 Interest Rate is 6.5%
  10. Jessica’s Credit Card Debt Jessica has a $2,200 balance on her credit card with an 18% interest rate. If Jessica chooses to not make any payments and does not receive late charges, how long will it take for her balance to double? $2,200 balance on credit card 18% interest rate
  11. Jacob’s Car Jacob currently has $5,000 to invest in a car after graduation in 4 years. What interest rate is required for him to double his investment? $5,000 to invest Wants investment to double in 4 years
  12. Summary What is the relationship between risk and return? How can a person reduce investment risk? Who should a person contact to purchase investment tools? What are the six main investment tools? What is a tax-sheltered investment? What is the Rule of 72?
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