Ezra had taken an online stock trading course and felt confident enough to begin trading. After researching a number of stocks, he made his first investment. It shot up, and he sold after a week for a $5,000 profit. “What a good start!” he exclaimed.
Ezra’s next investment proved volatile, though. After a couple of months, it began declining steadily, and he sold it for a $3,000 loss.
“Your portfolio should contain some stable stocks that provide dividends,” one financial advisor recommended. Ezra bought some shares in a well-established company and watched them rise slowly but surely through the year.
As April approached, Ezra organized his documents for income tax filing. He looked over his schedule D, which listed all his capital gains and losses with satisfaction. Overall, he had profited nicely during the previous year.
“What about maaser kesafim?” asked his wife.
“I was wondering about that,” answered Ezra.
“We always gave based on our salaries,” noted his wife.
“Yes, that was much simpler,” replied Ezra. “Here, I never know from one minute to the next what my portfolio is worth. We win some; we lose some. Some stocks I sell in the course of a few days or weeks; others are long-term investments.”
“Can’t you just compare the value of your portfolio this year to its value the previous year,” suggested his wife.
“I could, but what if it shows a gain one year and the next year the stock market plummets?” Ezra replied.
He decided to consult Rabbi Dayan.
“The obligation of maaser kesafim is when the profit is actualized,” Rabbi Dayan said to Ezra. “Thus, when a person buys stocks – even if he holds them for years and they rise significantly in value – there is no obligation to give maaser until he sells them. However, if the stock also provides dividends, maaser must be given from that money when received [Hilchos Maaser Kesafim 3:30; Tzedakah Umishpat 5:30].
“Most authorities allow offsetting profits of one sale with the loss of another. The Noda B’Yehuda writes, however, that each year should be considered separately, and a gain of one year should not be offset by a loss of another year [Pischei Teshuvah, Yoreh De’ah, 249:1; Hilchos Maaser Kesafim 5:5-7; Shevet Halevi 5:133:4].
“While some poskim write that the maaser year follows the Jewish calendar, many poskim allow setting an artificial maaser fiscal year such as the civil year or April to April when a person typically file his taxes [Shevet Halevi 5:133:3; Hilchos Maaser Kesafim 5:3; Hilchos Tzedakah, p. 105; Tzedakah Umishpat 5:9].
“The same rules apply to mutual funds. Although yearly statements may show gains, there is no obligation to give maaser until shares are redeemed. However, often there are yearly distributions of capital gains or dividends from which maaser should be given as they are distributed.
“Nonetheless, many people opt for automatic reinvestment of capital gains and dividends. Some authorities allow these people to delay giving maaser until they redeem their shares since the gain hasn’t been fully actualized and the maaser part is also being reinvested for the ultimate gain of the needy. This is certainly the case with retirement funds [see Shevet Halevi 9:201:7].
“Poskim write, though, that it is preferable to give maaser in a timely manner,” Rabbi Dayan concluded. “Furthermore, the final cost basis includes the reinvested dividends and capital gains through the years so it would be difficult to ultimately calculate the proper amount of profit. If maaser was not taken from the initial investment, it can be taken from the entire amount of each redemption, which includes part of the principal amount, reinvestments, and profit.”
