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Definition

A person who buys shares with the sole objective of making a quick capital gain. Usually, speculators concentrate on high-risk penny stocks or commodity shares where there is considerable movement. In South Africa, the problem with being a speculator is that, if you are successful, you will sooner or later be declared to be a "share dealer" by the Receiver of Revenue. This means that your profits in the share market will be added to your taxable income as opposed to being taxed as a capital gain. Capital gains tax for private people in South Africa works out at 16,4%, but if a capital gain is added to your taxable income you could pay as much as 45% if you are in the marginal tax bracket. SARS has said that if you hold a share for at three years, then any profit on selling it will be treated as a capital gain. For that reason, it is good to ask yourself where the company that you are interested in buying will be in three years. In other words, be an investor, not a speculator.

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