The Importance Of Capital Gains


Ths IRS releases a list of the 400 highest returns filed in the US.They are known as the Fortunate 400.So how do they get there?-Their money works for them.

The Fortunate 400 make as much as half of their incomes (in blue) from investments, and their household incomes have swung very similarly to the S&P 500 (in red) over the past 100 years.The S&P 500 is a broad mix of 500 stocks across multiple sectors, it is a much more accurate gauge of market sentiment than the more well-known Dow Jones Industrial Average – which tracks only 30 stocks.At the very top of the economy, the 400 richest tax returns analyzed by the IRS take home about 50 percent of their income from capital gains i.e they sell at the top of the market.Capital gains are income earned through investments, and they have shot up 1,300 per cent since 1992.

So are there any repeat names on the list ?-73% of the people make it to this list just once.Only four households appeared every year in the last 2 decades.So who are they?Your guess is as good as mine.For privacy reasons the IRS doesn’t publish these names.

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