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What is the difference between a taxable investment account & retirement accounts?
I have been getting this question a ton in my coaching calls & in the DM's
So let’s go through it!
(Thread)
I have been getting this question a ton in my coaching calls & in the DM's
So let’s go through it!
(Thread)
1. What is a taxable account?
This is an investment account that you open with any major brokerage
This allows you freely to invest, deposit, and withdraw money from the account how you see fit with little restrictions
You are subject to tax paid yearly in this account
This is an investment account that you open with any major brokerage
This allows you freely to invest, deposit, and withdraw money from the account how you see fit with little restrictions
You are subject to tax paid yearly in this account
2. What are tax-sheltered Retirement Accounts?
This is an investment account, but it is tax sheltered and has restrictions on the access you have to the money inside the account
401k, Roth IRA, or IRA - all fall into this category
What is the difference of each account?
This is an investment account, but it is tax sheltered and has restrictions on the access you have to the money inside the account
401k, Roth IRA, or IRA - all fall into this category
What is the difference of each account?
2A. What is a 401k?
This is an employer sponsored account that you are able to put money in tax free
This money then grows throughout your lifetime
(Details Below)
This is an employer sponsored account that you are able to put money in tax free
This money then grows throughout your lifetime
(Details Below)
Max amount allowed to invest is $19,500 / year Can’t withdraw without penalty or tax until 59.5 years old Generally have an employer match componentWhen you withdraw this money you are taxed on all of it
2B. What is a Roth IRA?
This account is the exact opposite of a 401k
The money is placed in the account after being taxed at today’s dollar
The money grows over your lifetime
(Details Below)
This account is the exact opposite of a 401k
The money is placed in the account after being taxed at today’s dollar
The money grows over your lifetime
(Details Below)
Max amount allowed to invest is $6,000 / year You have access without tax or penalty to the amount you deposited This is done individuallyThe account grows tax free - what you withdraw when you are older it is tax-free
As you can tell above all of these accounts have their pros & cons
For my family
- We both have 401ks (taking up to the match)
- Roth IRA Accounts
- Taxable Accounts - Dividend account (Kids education & Major expenses)
Don't put all your eggs in one basket!
What did I miss?
For my family
- We both have 401ks (taking up to the match)
- Roth IRA Accounts
- Taxable Accounts - Dividend account (Kids education & Major expenses)
Don't put all your eggs in one basket!
What did I miss?
