Listen to a Business English Dialogue About Short term gain or loss
Brooklyn: Hi Jordan, do you know the difference between short-term gains and losses in finance? Short-term gains are profits earned from selling assets that were held for less than one year.
Jordan: Oh, I see. What about short-term losses?
Brooklyn: Short-term losses occur when assets are sold for less than their purchase price within a year of acquiring them.
Jordan: Are short-term gains and losses common in investment portfolios?
Brooklyn: Yes, they’re quite common, especially for investors who engage in frequent trading or have a shorter investment horizon.
Jordan: How do short-term gains and losses affect taxes?
Brooklyn: Short-term gains are typically taxed at higher rates than long-term gains, while short-term losses can be used to offset short-term gains, reducing taxable income.
Jordan: Can you give an example of a short-term gain or loss?
Brooklyn: Sure, let’s say you buy a stock for $50 and sell it for $60 within six months. That $10 difference is a short-term gain.
Jordan: What if the stock is sold for $40 instead?
Brooklyn: In that case, the $10 difference represents a short-term loss, which can be used to offset any short-term gains or deducted from taxable income.
Jordan: Thanks for explaining, Brooklyn. Short-term gains and losses seem straightforward but can have significant implications for tax planning and investment strategies.
Brooklyn: You’re welcome, Jordan. It’s essential to consider the tax consequences and overall investment objectives when making decisions about buying and selling assets in the short term.