Say you want to give a thousand dollars to a cause you care about. You can write a check, or you can donate a thousand dollars of stock that has grown in value. Same gift to the charity. Not the same outcome for you.
With cash, you give a thousand and that is that. With appreciated stock, you hand over the shares directly, and two things happen. You skip the Glossary of Financial ClarityCapital gainsThe profit when you sell something for more than you paid. Hold it longer than a year and it's “long-term,” which gets taxed at friendlier rates. Sell inside a year and it's “short-term,” taxed like your paycheck.General education only. Not tax or investment advice. See the full glossary tax you would have owed if you had sold those shares yourself, and if you itemize, you still deduct the full value. You gave the same amount and kept more of your own money, because you never triggered the tax on the growth.
The bigger the gain on the investment, the bigger the gap between the two. It is one of the cleanest moves in giving, and it costs nothing but a little paperwork to route the gift through shares instead of cash. If you give regularly, it is worth setting up once and reusing every year.
Hosted byNick GeorgeCFP®, ChFC®, CLU®, IWA™FounderView bio →
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