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Advantaged Retirement vs. Taxable Investments | When Should You Choose Taxable Investment Accounts? - YouTube
Channel: Tiffany Tarboro
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welcome to my channel future millionaires i聽
hope that you're having a great week so far聽聽
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my name is tiffany so i know i talk a lot about聽
crypto on this channel but i'm also a huge fan聽聽
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of diversification which brings me to the topic聽
of today today i'll be discussing the benefits聽聽
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of having taxable investment accounts and the聽
benefits of investing in them so if you're trying聽聽
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to grow wealth and retire early then please stick聽
around if you're interested in learning about聽聽
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these types of investment accounts also a great聽
way to support my channel is by hitting the like聽聽
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button and leaving a comment below also make sure聽
to subscribe to this channel and don't forget to聽聽
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click on the notification bell this way whenever聽
i upload a new video you will be updated with聽聽
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the latest information on money strategies let's聽
get to the topic of today so the biggest question聽聽
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of the day when should you actually choose a聽
taxable investment account while taxed advantaged聽聽
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retirement accounts like the 401k and ira are the聽
most common ways americans own stock it's possible聽聽
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even advisable to choose taxable investment聽
accounts for some of your financial goals聽聽
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while taxable investment accounts aren't right聽
for every situation but they are a good fit聽聽
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for some of your investing dollars so what is a聽
taxable investment account a taxable investment聽聽
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account lets you buy and sell investments such as聽
stocks bonds etfs which are exchange traded funds聽聽
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and even index funds with the click of a button聽
all you have to do is go online you can either聽聽
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open up an account with your financial broker or聽
a robot advisor you deposit the cash and voila聽聽
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you can purchase all of these securities and i聽
know what you're saying tiffany but taxes i know聽聽
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taxes can be such a scary word but don't be fooled聽
the word taxable in the name just simply means聽聽
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that any increase in value or income you see from聽
your investment is taxed during that tax year you聽聽
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experience them this might happen if you sold聽
a stock add a gain or if you receive dividend聽聽
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payments depending on how long you've held an聽
investment stock gains might be taxed at your聽聽
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normal income tax rate or lower long-term capital聽
gains tax rate dividends generally qualify for聽聽
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this regardless of how long you've held them taxed聽
advantage retirement accounts on the other hand do聽聽
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not have the same tax requirement as long as your聽
money is held in your account well you won't owe聽聽
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any taxes on any gains or income you see please聽
keep in mind that you do often end up paying taxes聽聽
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when you do make a withdrawal from your retirement聽
unlike taxable accounts you can't just contribute聽聽
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to your retirement accounts endlessly retirement聽
accounts are subject to an annual contribution聽聽
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limit and in the case of roth ira limits聽
on the amount of income you can contribute聽聽
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with all of these tax advantages of retirement聽
accounts it's easy to see why they're often聽聽
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people's go to investment accounts especially聽
when they're investing for long term and聽聽
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if you haven't started saving for retirement聽
already you should make sure you're setting at聽聽
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least something aside in your workplace 401k or聽
an individual retirement account ira before you聽聽
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consider putting money into a taxable investment聽
account but after you've checked those boxes here聽聽
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are a few scenarios where a taxable account would聽
actually make sense so let's look at benefit from聽聽
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additional liquidity liquidity is the top reason聽
an investor might pursue a taxable investment聽聽
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account plus there's no age restrictions on when聽
that money can be accessible with taxable accounts聽聽
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unlike retirement plans such as a 401k annuities聽
in traditional iras in which you have to wait聽聽
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until you're 59 and a half or owed taxes plus聽
a 10 penalty in general taxable investments can聽聽
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be accessed by investors at any time with no聽
age restrictions this makes taxable investment聽聽
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accounts ideal for mid to long-term goals that are聽
at least a few years down the road so i know we聽聽
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all want to have a little extra for retirement so聽
let's take a look at save more for retirement if聽聽
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you've already maxed out your non-taxable account聽
contributions like your 401k or ira and you have聽聽
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additional funds to invest taxable investment聽
accounts can make perfect sense and if you're聽聽
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concerned about the taxes associated with the聽
retirement savings outside of the tax advantage聽聽
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account you've got options if minimizing tax is聽
a goal within your taxable account you can always聽聽
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invest in the tax-exempt bond or tax managed聽
fund and whatever you do avoid rmds in retirement聽聽
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if you're worried about required minimum聽
distributions or the mandatory minimum withdrawal聽聽
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the government requires for all but roth ira once聽
you reach a certain age then a taxable account can聽聽
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allow you to keep your money invested for a longer聽
period under the current law with pre-tax dollars聽聽
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investors must start taking distributions by age聽
72 investors are not under any obligation to ever聽聽
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take a distribution from a taxable investment聽
and this is great news especially if you want聽聽
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to continue to keep building your wealth all by聽
just holding and continuing to add more income to聽聽
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your taxable accounts so let's take a look at some聽
other options if you're currently trying to save聽聽
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up for college and you want a lot of flexibility聽
in the 529 plan you are only allowed to use the聽聽
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funds for qualified educational expenses if聽
you want to pay for anything your student needs聽聽
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that isn't considered qualified a taxable聽
investment account can give you savings to boost聽聽
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and provide increased flexibility in fact a 529聽
with a flexible brokerage account can be ideal聽聽
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tax move your 529 account covers all qualified聽
educational expenses letting all of your taxable聽聽
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investment proceeds pay for expenses such as room聽
and board over the summer when the school isn't in聽聽
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session travel to and from home or abroad and even聽
incidental expenses throughout the school year聽聽
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so this is actually a great solution for parents聽
who are trying to make sure that they have enough聽聽
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money set aside we also want to make sure that聽
we have broader investment options a taxable聽聽
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investment account broadens horizons for investors聽
who want the ultimate control and the investments聽聽
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they hold and investment strategies they pursue聽
a taxable account opens up more options for more聽聽
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adventurous investors for example those who聽
want more easily to invest in cryptocurrency聽聽
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or do options trading bitcoin investment and聽
retirement account is very limited additionally聽聽
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some brokerages limit complex option strategies聽
in your retirement account let's take a look聽聽
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at inherited retirement accounts let's say you聽
inherit a retirement account because you are now聽聽
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required to clean out your inherited retirement聽
accounts within 10 years of receiving them聽聽
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traditional iras and 401ks with untaxed dollars聽
can create unexpected tax burdens for recipients聽聽
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in these instances it might actually make sense聽
to spend assets in retirement accounts while聽聽
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you're still alive and then taxable accounts that聽
don't have clocks on their withdrawal schedule聽聽
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investments in a taxable account qualify for聽
the tax-free step up basis when you pass away聽聽
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so even though the account is taxable聽
when you pass away under the law聽聽
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all of the built-in gains those seen before you聽
inherit the account become tax-free so think about聽聽
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the benefits if you have a relative who bought聽
amazon back in 1997 and it was valued at 1.73聽聽
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cents per share in an inherited taxable account聽
thanks to the step-up basis you've inherited聽聽
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all of the gains between that purchase price and聽
today's price of three thousand dollars per share聽聽
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and only oh capital gains on any increases after聽
you've received the account so this basically聽聽
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means that any capital gains received prior to you聽
receiving the inheritance you don't even have to聽聽
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pay so you might be asking yourself how do i go聽
about opening a taxable investment account first聽聽
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of all if you feel as though a taxable investment聽
account is a good fit for your savings goals聽聽
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opening one is actually pretty easy first decide聽
on where you want to open up your account you can聽聽
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either use a financial advisor or an online broker聽
fund your account so that you have enough cash聽聽
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available to make your investments and then you聽
can link all of your existing bank accounts step 3聽聽
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research the investment and make selections based聽
on how long you want to invest for also decide聽聽
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how much risk you want to take on and what your聽
savings goals are step 4 make the purchase and聽聽
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step 5 don't forget to rebalance your portfolio聽
and adjust your investment strategies as you're聽聽
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meeting your goal as a matter of fact i actually聽
spoke about rebalancing in a previous video i聽聽
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will actually leave the link up at the top right聽
portion of the screen you may choose to open more聽聽
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than one taxable investment account if you're聽
saving for multiple goals a multiple account聽聽
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strategy can be helpful especially if you have聽
short term and long term goals the bottom line is聽聽
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taxable investment accounts can offer more聽
flexibility and greater liquidity for investors聽聽
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beyond tax advantage savings vehicles common in聽
retirement and educational savings as with any聽聽
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investment it's wise to sit down with a financial聽
advisor and even a tax professional to discuss聽聽
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your goals and review any tax implications聽
four investments you hold outside of the tax聽聽
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advantage accounts if you're ready to invest in聽
these taxable accounts here is a list of the top聽聽
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brokerage accounts i will also leave a link in the聽
description so now that you know the benefits of聽聽
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having a taxable investment account are you going聽
to start building additional wealth outside of聽聽
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your 401k and if you currently do not have a 401k聽
set up will you make the first move to start today聽聽
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remember the only way to achieve financial freedom聽
is by investing and paying yourself first you are聽聽
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the key to your own successful vehicle if you聽
drive it to your desired destination you can聽聽
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achieve your desired dreams and start living your聽
best life so i hope that you enjoyed this content聽聽
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today please leave a comment below and like and聽
subscribe and i will talk to you again soon bye
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