Warren Buffett’s Favorite Tax Advice

Warren Buffett screenshot

For years, Warren Buffett has been regarded as the greatest investor ever. It’s no surprise that when he gives investment advice, everybody and their brother listens since has had great success growing his fortune through prudent investments.

Recently, however, Buffett offered some advice that was a little off-brand for him. Rather than giving investment advice, Buffett shared one of his tips to keep your tax bill lower.

What is this tip that could help slash the taxes you owe on investment gains? It’s simple: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

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This advice is actually great for a couple of reasons. In general, long-term investors have usually performed better beating the market than short-term investors. But it is also very sound advice because if you hold on to stocks for longer than a full year, you will pay a much lower capital gains tax on any realized gains.

Capital gains arent always taxed as ordinary income. In fact, they’re divided into two categories: long-term and short-term capital gains.