What tax do I pay on my investments?

If you bought at 100 and it is worth 130 today, that 30 is not taxed: it is an unrealised gain, it exists only on the screen. The tax arrives when you sell and the gain becomes real — which hands you a power almost nobody uses: you decide when.

The flip side is that delaying a sale to avoid tax is a terrible reason to keep something you no longer want. Tax is a percentage of the gain: if the gain evaporates, you saved the tax by losing the capital.

Almost every tax system lets you offset: if in one year you make 1,000 on one holding and lose 800 on another, you pay on the 200 difference, not on the 1,000. But for that, the loss has to be realised — you must have sold.

And almost everywhere, unused losses expire after a few years. It is the gift most people leave on the table: they hold a losing investment for years "until it comes back", and meanwhile let the right to pay less tax on everything else expire.

First: what the rate is, and whether it differs between government bonds, shares and savings accounts — in many countries it does, and the gap is large. Second: who pays it, you through a tax return or the broker on your behalf. The second costs a little more and removes every obligation.

Third: which losses can offset which gains. It is the least intuitive rule and the most expensive: in several countries losses on some instruments cannot offset gains on others, and those who don't know find out too late that they paid tax on a gain they never really had.