Looking for an expert to explain trading 212’s tax to me.
Background: My easy access account had a rather poor 1.16% interest rate. This has been slashed to 0.01%!!! I want a relative amount of liquidity with this money as it is a savings account for a house and I’m close to being able to get one.
Thinking: One option available is to but it into a very defensive stock. For example I could put it into KO for a year or two. KO is at 3.34% dividend yield. This yield I believe is cut by US tax at 15%.
If I bought 1000 KO shares, for example, this would be 321.72 per quarter(p/q). *0.85 = 273.479 p/q. *4 = 1093.916 per year (p/y).
The savings account was circa 40 per month (p/m), which is 480 p/y. So a big trade off, for the liquid vrs the risk.
The question: My fear is if I put in 40-50k and then want to take it out in one to two years, what sort of tax implications would I be liable for? I don’t want to be putting it in as a savings account and then get burnt on tax.
For example if I’m liable for a 10% tax on removing 50k then I’m -3k over two years (if growth is stagnant).
NB: It may seem odd that I’m putting money in already without thinking of tax withdrawls, but for me this is a long-term investment strategy. I plan on doing DRIP over 20+ years and paying out smaller amounts when I retire, not circa 50k in one lump sum.
Any help will be greatly appreciated.