Quick question about the tax implications of these two options. My assumption (and I could very well be wrong) is that if I hire a money manager to invest for me, that I’m not taxed on the increase in my portfolio until I choose to sell/cash out.
No. It is the same as if you had done the trades yourself. You should get a 1099 or equiv showing a breakdown in long and short term gains as shown above. In using a money manager, you are paying for their ‘expertise’ in making investment decisions.
If so, is there a way to manage your own money/investments without paying taxes until you cash out or something similar?
Yes, well sort of … Build a portfolio based on index ETFs and hold without selling. You will have dividends, but no captial gains until you sell.
However, if the money manager takes your funds and puts them in a pool, e.g. a mutual fund, then you are taxed each year based on the net gains/losses incurred by that fund in each year.
