--- title: "Meaning & Key Takeaway of: Index funds do not trade from security to…" description: "\"Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes.\" — Burton Malkiel" image: "https://sms4smile.com/quotes/i/949/burton-malkiel-31547_capital-gains_index-funds-do-not-trade-from-security-t_2997402.png" --- # Index funds do not trade from security to security and… ![“Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes.” quote by Burton Malkiel](https://sms4smile.com/quotes/i/949/burton-malkiel-31547_capital-gains_index-funds-do-not-trade-from-security-t_2997402.png) [Download](https://sms4smile.com/quotes/i/949/burton-malkiel-31547_capital-gains_index-funds-do-not-trade-from-security-t_2997402.png) [Open image](https://sms4smile.com/quotes/i/949/burton-malkiel-31547_capital-gains_index-funds-do-not-trade-from-security-t_2997402.png) > “Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes.” [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Index funds avoid frequent trading, reducing capital gains taxes. **In simple terms:** Index funds lower tax burdens through passive investing. Key Takeaway Consider low‑cost index funds for tax efficiency. Themes investing taxation passive strategy Mood practical thoughtful Type financial educational When to use this quote - retirement planning - tax‑advantaged accounts - wealth building Key Concepts efficient market hypothesis tax planning portfolio management Questions to Reflect On - Do you prioritize tax savings over potential higher returns? - How does market timing affect index investing? A Different Perspective Market volatility still impacts returns. ★ ★ ★ ★ ★ No ratings yet [Avoid Capital](https://sms4smile.com/quotes/about/avoid-capital-4741725/) [Capital gains](https://sms4smile.com/quotes/about/capital-gains/) [Capital gains tax](https://sms4smile.com/quotes/about/capital-gains-tax-27463/) [Customer](https://sms4smile.com/quotes/about/customer/) [Cybersecurity](https://sms4smile.com/quotes/about/cybersecurity/) [Fund](https://sms4smile.com/quotes/about/fund/) [Funds Trade](https://sms4smile.com/quotes/about/funds-trade-4741724/) [Gains](https://sms4smile.com/quotes/about/gains/) [Gains Taxes](https://sms4smile.com/quotes/about/gains-taxes-3424977/) [Index funds](https://sms4smile.com/quotes/about/index-funds/) [Investing](https://sms4smile.com/quotes/about/investing/) [Security](https://sms4smile.com/quotes/about/security/) [Taxes](https://sms4smile.com/quotes/about/taxes/) [Trade](https://sms4smile.com/quotes/about/trade/) ## Related quotes > [I will eliminate capital-gains taxes for the small businesses and the startups that will create the high-wage, high-tech jobs of tomorrow](https://sms4smile.com/quotes/barack-obama/i-will-eliminate-capital-gains-taxes-for-the-small-businesses-and-the/) [Barack Obama](https://sms4smile.com/quotes/author/barack-obama/) > [I can make a firm pledge, under my plan, no family making less than $250,000 a year will see any form of tax increase.…](https://sms4smile.com/quotes/barack-obama/i-can-make-a-firm-pledge-under-my-plan-no-family-making-less-than-250/) [Barack Obama](https://sms4smile.com/quotes/author/barack-obama/) > [Index funds are... tax friendly, allowing investors to defer the realization of capital gains or avoid them completely if the shares are later bequeathed.…](https://sms4smile.com/quotes/burton-malkiel/index-funds-are-tax-friendly-allowing-investors-to-defer-the/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [The capital gains tax is 15 percent now. 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Active management as a whole…](https://sms4smile.com/quotes/burton-malkiel/index-funds-have-regularly-produced-rates-of-return-exceeding-those/) [Burton Malkiel](https://sms4smile.com/quotes/author/burton-malkiel/) > [In investing, you get what you don't pay for. Costs matter. So intelligent investors will use low-cost index funds to build a diversified portfolio…](https://sms4smile.com/quotes/john-c-bogle/in-investing-you-get-what-you-don-t-pay-for-costs-matter-so/) [John C. Bogle](https://sms4smile.com/quotes/author/john-c-bogle/) > [The key aspect of an index fund is that many of them, not all of them, but many of them are extremely cheap.](https://sms4smile.com/quotes/william-j-bernstein/the-key-aspect-of-an-index-fund-is-that-many-of-them-not-all-of-them/) [William J. 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