Taxable Brokerage Vs. Retirement Accounts
Primer on the various types of accounts available to you and strategies to help lower your taxes
There are a lot of different types of accounts out in the world that you can put money in. And depending on the account you may have very different experiences and options when it comes to taxes, liquidity, restrictions, and risks.
Some people really prefer 1 type of account over all the rest and some people just naively put some money in each account…but most people sadly don’t know even the basics of the main account types.
Today’s post will go a little deeper into the different types of accounts (taxable, qualified pre-tax, qualified post-tax, and briefly miscellaneous other tax-advantaged accounts), the pros and cons of each, and some potential strategies to use them efficiently.
Understanding the types of accounts can be huge, especially as your portfolios and net worth grows, as taxes start to become a massive expense and lowering taxes becomes more and more important.
And once you get to retirement, these accounts can have different rules which results in you wanting to efficiently drawdown from your various accounts in an efficient way.
The last thing to remember, is that taxes are not static. So even if you don’t think the accounts are important now with current tax rates, just remember that in the past those rates could be a lot higher and that only makes it more important to know what tools are available to you.
