GLOSSARY TERM
FIFO
FIFO stands for First In, First Out. It is a method used to decide which shares or fund units are treated as sold first when you sell part of an investment.
What does this mean in practice?
If you bought the same investment at different times and at different prices, FIFO usually means the oldest purchase is counted as the one you sold first. This matters because your profit or loss is based on the original purchase price of the units being sold. If those older units were bought at a low price, the taxable gain may be larger. If they were bought at a higher price, the gain may be smaller.
Example
You buy 10 ETF units at €50, and later 10 more at €70. If you then sell 10 units for €80 each, FIFO means the first 10 units bought at €50 are treated as sold. Your gain is calculated from €80 minus €50, so the profit is €30 per unit. In many tax systems, that larger profit can also mean more tax than if the €70 units had been treated as sold first.
Why it matters
FIFO can affect your taxable gain and the numbers you see when selling investments. It helps you understand that the timing and price of earlier purchases can matter later, especially if you invest regularly over many years.
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