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This morning President Bush held a news conference to address a variety of issues, most notably the economy (but without using the word “recession“). As investors gear up for tomorrow’s expected Fed rate cut, as well as inflation data on Thursday and jobs data and Friday, President Bush assured us that measures are being taken to stimulate the economy (including the tax rebate).

The economic data, as well as the response to the president’s remarks on the economy this morning, will affect a variety of markets, from stocks to bonds to currencies to commodities. When you go to make investments, it is important that you consider economic data, as well as the rhetoric used by leaders.

President Bush addressed the issues associated with the housing market, as well as those associated with rising oil prices and with food prices inflation. A great deal of the president’s talk of the economy focused on energy costs, and ways he thinks that we can stimulate the economy by lowering energy prices.

President Bush also pressed Congress on the economy, intimating that it is the fault of the Democrat-led Congress that the economy is having problems. The New York Times reports on today’s remarks by President Bush on the economy:

Speaking at a news conference in the White House Rose Garden Tuesday morning, President Bush issued a sweeping indictment of the Democratic-led Congress, essentially blaming the sputtering economy on what he characterized as the House’s failure to propose “sensible” bills that he could sign into law. …

“On all these issues, the American people are looking to their leaders to come together and act responsibly,” he said. “I don’t think this is too much to ask even in an election year.”

While today’s remarks will likely have an effect on the stock market and other markets, it is worth noting that the Fed rate cut tomorrow, as well as worries that it will be the last for quite some time, are more likely to affect the stock market — and other markets as well.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: investing blog, stock market, economy, stock market news,
President Bush, President Bush economy

As you are probably well aware, today is Tax Day. And just like your regular income, you have to pay taxes on gains made from investments. You can offset some of these gains by claiming a capital loss. Also, it is worth noting that if you have a Roth retirement account (IRA or 401k), you won’t have to pay taxes on gains from your investments.

Long-term capital gains. If you have held an investment for more than a year, it is considered long-term. When you sell these investments, you pay long-term capitals gains taxes. These long-term gains are figured based on your income. You will pay more if your income is higher. There is a bit of a formula that comes in to play.

Short-term capital gains. These are gains from investments that you hold for less than 12 months. Taxes on short-term capital gains are more straightforward than their long-term counterparts. Instead, short-term capital gains are taxed as ordinary income.

Real estate sales. These are often lumped in with long-term capital gains. The idea is that you have to pay taxes on the positive difference in what you bought the house for and what you sold it for. The good news is that you can get an exclusion when you sell a primary residence, as long as the gain is under $125,000 ($250,000 if married). But watch out on investment property or a vacation home! There are different rules, although you can use an exchange to limit your tax liability.

Cash investments. You still have to pay taxes on cash investments. Take the interest on your savings account, for example. Whatever interest you earn on a savings account must be counted as part of your income. There is a place for you to report on the 1040 form.

Withdrawals from retirement accounts. When you withdraw money from a traditional 401k or a traditional IRA, you need to pay taxes on that money. Watch out! In some cases the withdrawals can bump you up a tax bracket.

Some of the rules surrounding how you pay taxes on your investments can be complicated and frustrating to figure out. I suggest that you consult an accountant or tax attorney when figuring out what you owe on your investments, and in finding out ways to reduce your tax liability.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: tax liability, pay taxes, taxes investments, investing blog,
investments, retirement accounts, Roth IRA