My Favorite Investment Account & Only 35% of Investors Use It 

I thought I was the only one with this preference. I like tax advantaged accounts, but I LOVE the freedom and flexibility of a regular taxable brokerage account. No withdrawal requirements or limits, no contribution limits, just good old fashioned complete flexibility and freedom.

I have 401K, Brokerage, HSA, and Roth accounts. If I could go back and do it again, I would have put more emphasis on the brokerage account. My opinion, 401k up to the company match, Roth IRA, HSA, and then brokerage account for the rest. YMMV depending on your specific situation and goals. No harm, no foul though. I ran the numbers and retirement is now less than a year away. I was going to wait until the end of 2024, but after looking at things I moved that up to June 2024. The simulators are giving me a 97 - 99% chance of success. I can't make more time, so I might as well take the leap.

I thought for sure it would be the HSA.

Work until 70 if you WANT to work to 70. But plan so you don't HAVE to work to 70. I knew a lady that retired at 83, and that was only because her health got to the point where she really had to stop working. She didn't want to --- she loved her job. I remember her telling me about how her high school counselor told her that if she went to college she could become a nurse or teacher. She insisted she wanted to become a chemist!

Love it. Couldn't agree more with the need for control and ease of access, thus a brokerage account. We have one for the very reason of wanting a bridge fund in early retirement to "bridge us" to when we an tap our 401Ks and IRAs. Having multiple buckets if you will to earn and pull money from is fun !!

Your advice is always practical and helpful. Thank you.

Excellent channel. I have my 20-something year old kids watching your channel as well. Financial Literacy education at its best

A brokerage account was a great place for us to hold our money while we saved up over 7 years to make a 20% downpayment on our first home. -- We wouldn't have been able to do that if we had only held it in a savings account. Brokerage accounts are great for multiplying money you want to use before retirement, and, obviously, retirements are even better for multiplying money you will use in retirement accout. Like you said. -- Having options, and using those options are great.

Love it. This is the 5th video of yours that I watched, and I now just subbed. And yes, I have a work Fidelity 401K, a Roth with Fidelity and a Vanguard account with little over 100K of index funds in it. Your advice is spot on - thanks

Very informational and helpful.

Cool video! Thank you for being so clear. 🙂

Love it ! N/A for me but a Beautiful video. You had a wonderful grandma. Happy 4th ! 😊

I love RothIRA, Roth401(k) and HSA....since they'll be tax free once I start getting distribution at 59.5 yo. Some years ago I did a lot of Backdoor Conversion which bump up my Roth account, so it currently in six-figure. I do have SEP, IRA and Brokerage as well, those are my first line of distribution when I retire next year. Your videos are very informative and suits the current events. Keep it up! Thanks Erin for you "humanitarian" work....

Thanks for another great video Erin! I appreciate all the hard work you put into these.

Thank you for the video💪🏽

Terrific video; I hope some young people out there see this and follow this lady. Base income is huge as is discipline; some will always do better than others; but everyone can do well if they give it the max effort

Great work, thank you.

Glad to finally understand the capital gains tax on this account. Thank you!

Great Video! Brokerage accounts are great if you can resist the temptation of dipping into them for non-essentials. (its kind of like a big plate of cupcakes sitting in front of you...mmmmm cupcakes!). Also it is tough to stay focused on the right investments. Too often I feel that people invest emotionally or have knee-jerk reactions with their investments (too much money in investments that promise super quick growth). My financial advisor has been a godsend to me because I like cupcakes... he takes a small fee, but is well worth it. And he slaps my hand when I reach for those cupcakes. 🙂

Great video! Thanks for the reply.

That is awesome you started a roth at 18. i had a teacher explain that if you funded your IRA at 18 -23 and obtained a 10 percent return by the time you retired you could be a millionaire. Sounded good in 1981!

Another great video as always. I've heard you mention index funds before and I'm actually going to include index funds in my portfolio. I bought two pharmaceutical stocks during the pandemic and because of their own potential misdeeds, I have taken an absolutely horrific loss on both stocks due to their infringement on other vaccine manufacturers. I'm diversified with no stock or sector having a majority holding in my portfolio, but both losing stocks have weighed my portfolio's performance down. I'm used to averaging between 15-20% annual gains. But picking stocks is a lot of work and even some potentially great stocks can underperform out of nowhere. Thank you for the work you do with your channel!

Love this video. The fact that you talk about benefits outside of taxes is great. I like Roth accounts for the benefits in addition to the taxes. I have never been able to save the % of income you mention here but if I had it to do all over again I would contribute to employer plans up to the match then a 50/50 split between retirement accounts and regular brokerage account. Taxes matter but they are not everything. As you mention long term capital gains are pretty awesome.

I am following exactly your strategy.. After watching your video , I am happy that someone else is also thinking like me .. I have hardly seen anyone follow this strategy and it was very difficult for me you understand the reason behind it ..

Some very good points made. I also use my brokerage account to purchase both long and short term bonds.

Another great video, Ma'am. Now I know your grandmother got you started. I agree with almost everything you said in this except I have 95% of all our money in either a Rollover IRA or a Roth IRA both in brokerage accounts. Which BTW keeps us in the 12% tax bracket. I have to take 40k in RMD's now and I convert 40k every year and still stay in the 12% bracket for the most part. No pension to add to the annual income because I was able to take a lump sum. I tell my friends that I did not set out to stay in the 12% tax bracket it happened by dumb luck. I worked in a factory for the last 40 years of my working life and my wife raised our 2 children. We are in our early 70's and we have the lions share of our nest egg in 35 individual stocks that totals well into the 7 figures. According to all the talking heads being almost 100% in stocks at 70+ years old in a big no no, but when Covid hit I was out of the market in a matter of hours with stop losses in place. I think that having all our money in IRA and Roth works very well to keep us in the 12% tax bracket. It takes more than 100k a year in retirement and the Roth makes that happen. Two years ago we bought another house and I was able to $350k from the Roth and as know, no tax implications. You can probably guess that I have been converting for years. I think I am rambling now, I will stop. lol

love your channel

Roth IRA is my favorite because, like a brokerage account, you can access contributions if you need them. That’s a valuable option that lets you take a little more risk with other funds than you might do if the Roth money were locked up for decades. Also, the earlier you start investing, the more valuable that Roth is because the balance in your account at retirement will be mostly gains, not contributions, and you’d rather get those tax free.

Great video! 💜

I’m more impressed every time I watch one of your videos.

You were so lucky to have a grandmother like that! I was taught to hate anyone who handles money... bank, post office, insurance agent, business people in general. I had to re-educate myself and adjust my attitude. I started investing later in life, but I'm doing fine. Thank you for an informative video. My favorite accounts are my three brokerage accounts. I also don't like IRAs ... but they are good for those who have trouble with self discipline. I've become a very regular and careful dividend and value investor. 🎉

Bravo ! Great video

Thanks for your perspective on this. I have a similar view and am buying index funds in my brokerage account but haven’t actually withdrawn anything yet. Is tax loss harvesting something we should consider if just buying index funds? Also, I’d like to know more about using charitable gift funds to reduce capital gains taxes too. Maybe you can elaborate on how to make the most of these brokerage accounts in future videos. Thanks again!

Thanks for information! I love your videos! They make me think about investing and saving in new ways. You mentioned a pension in this video. I will be retiring next year from the Army. I'm looking for videos about pension and retirement planning. Do you have or can you do a video on this?

I like my Brokerage a lot And I like my backdoor Roth and Mega Roth I like my 401k that comes with my company match and contribution! So which do I like best, well it’s Personal for my age and financial situation. Being over 59.5 they now all have their perks. I guess having as many buckets full is the best strategy and then being tax savvy as you drain them. Great video Erin and interesting to hear how things change for us as we get older.

First off Erin, you are awesome and your husband is a lucky man. I currently have a Roth, not a huge balance. A 457 account that I no longer contribute to because I had to retire. I have an online savings account and CDs at my local financial institution. My pension has so far been able to pay for all of my needs. I have had brokerage accounts in the past but they really make a mess of your taxes if you actually trade. If Biden gets his way to be able to tax unrealized gains, the brokerage account might become untenable. As far as for when you want to retire, sometimes you just don't have a choice but whe that happens it is good to know that you have been responsible and won't starve if your health suddenly goes bad. God Bless you Erin and your Husband.

I do retirement accounts, not brokerages, but earlier this year I did take some "dead cash" out of my savings that was earning those awful rates, and get an I-bond at 6.5%, and also ladder T-Bills at 4 - 5% with Treasury Direct.

If you love what you do then keep doing it for as long as you’re able. If you retire early and don’t have something to get up for or look forward to doing then it’s just a ticket to an early grave. Balance is the key and of course taking the time to learn about good nutrition and get some exercise and most importantly is what you inherited from your parents.

I was self-employed and turned one IRA into a SEP-IRA so I could take advantage of that higher limit. It was a good move! I do have a brokerage account, but it is not my favorite because I opened it and contributed to it just before the big slump of the last couple of years. I'm not an indexer, but I do have one index fund in that account. The managed fund has been doing better than the index fund until recently. I do follow the "set it and forget it" approach. I'm having a good retirement!

Thank you for the video, one thing I'd like to mention is how the words economy and ecology have the same Latin root word, eco, basically translating to home. To me, this shows that to have a healthy home, we need solutions that are both economically AND environmentally intelligent. With this in mind, the Federal tax credit for Solar PV and solar hot water panels is 30%.

Great content Erin. I like the brokerage account as well. Whats your take on having more than one brokerage account? Also have two retirement accounts as well.

Very well delivered. I have always rolled an employers 401k into my IRA pre-tax brokerage within 60 days of moving along. I can't imaging having a web of investments (fee deductions) in various employers 401k accounts. And if I want to buy (and do) some single equities, I can.

Well, miss young lady. Trust me, when you get to retirement age, you're gonna love that Roth a WHOLE LOT MORE. And yes, health was a big consideration for me retiring at 52. My mom passed at 59, a few month's after she retired. I loved my self employed work I did, until I didn't, and retirement was within reach. Things do change and I hope you reach yours goals and stay happy.

Huge credit to you for thinking through the tax bill on a brokerage account paying mostly LTCG tax. Too many people just blindly say Roth or traditional IRA/401k is always best. I find them naive. 🏆 for you!

You do a great job of calmly and simply explaining investing concepts. Whether your are experienced or novice investor there is something to take away from your videos. Good job!

Thanks Erin…I 🙏 that all young people find you. Young wage earners, & I’m talking 16 + should develop your mind set toward being a super saver or just a saver. Future happiness starts at this point. A prophecy of comfortable retirement is what Erin has mapped out for all to see….I’d listen carefully….

I'm with you on the brokerage account as a favorite. As I've been focusing on where my increased savings is going for the past three years, I'm emphasizing Roth and Brokerage accounts and de-emphasizing a 401K that is not matched.

I like the way you think. I enjoy trading from my tax-advantaged accounts...downside to that is there's no deduction for losers.

Options! Options are what you should be focusing on. Sure it's easy to figure the dollars but, you are absolutely right in saying your options are most important. One idea I didn't hear you mention was whether you are better off paying tax on income or capital gains. If you need money, do you really want to have to pay tax too.

HSA is probably my favorite account, but I also do love the brokerage as well!

I'm surprised you didn't mention roth conversion ladders and substantially equal periodic payments. The money in your retirement accounts is certainly harder to access than that in your brokerage account, but as long as you can project what you'll need in five years it's still quite accessible.

I max out my 401k and Roth. If I have anything left over, I throw it in my brokerage account and let it grow. I only dip into it if I need to make a big purchase like a car which only happens once every 10 years or so. I also treat it as a kind of insurance policy if were to develop a major health issue that isn’t completely covered by health insurance. It’s all index funds and, like my Roth and 401k, I don’t have to check on it frequently. I’m confident I’ll have enough when I retire.

As a person nearing retirement the key factor is time. Started investing early 20’s. 40 years of investing has produced great gains.

Just found your channel, awesome content! Is that where you store your emergency fund, then? (Money Market fund)

Here in Canada, the tax advantages in our tax-deferred (RRSP, or Registered Retirement Savings Plan) and after-tax (TFSA, or Tax-Free Savings Account) investment accounts are persuasive, and thus make a taxable brokerage account something you think twice about unless the retirement accounts are full. While there is some criticism of our RRSP here -- people chafe at having to pay tax on withdrawals, withdrawals must begin in the year you turn 71 -- there's a lot to like about tax-free compounding. That said, with my retirement accounts now full, I've begun investing in a taxable brokerage account. They require special handling, as selling from them involves tricky tax calculations. To minimize selling, I keep an ETF there. I always enjoy those stories of your childhood investing under your grandmother's influence, the making of a financial prodigy. I've something similar, in that my mother ran a small credit union attached to a labour union local in my small Ontario community from a spare room in our house when I was a child. I remember workers coming to get loans, and get other money-related business done. While years of grad school meant I got a later start in investing, as there was very little to invest, I've saved aggressively, moreso now with my mortgage paid. So the brokerage account really defines the future of my investing strategy, and I'm glad you are giving such accounts profile here. They are often neglected as investors think about their options.

That’s so cool that your grandma was into investing. I got interested in investing about 3rd or 4th grade. One grandma wanted to give the grandchildren American girl dolls, but when she asked which one I wanted, apparently (I have no memory of it, haha) I said that I would prefer to invest the money. Well, I got no American girl doll and no investing money. And my interest in investing faded away for nearly 2 decades. Nobody knew enough about it to help me.

I admire your knowledge. I wish I was as smart as you when i was your age.

I totally agree with you, right now I have Roth IRA, 401K & brokerage account

As a retiree we use our local credit union for max checking, paying 3% up $15K on deposit, along with a Vanguard brokerage, IRA..wish we had done Roth accounts many years ago!

I have a brokerage (Fidelity), Roth, 403b, and HSA. I like them all, but the HSA is my favorite due to the tax advantages.

Great content. I find it interested when I run into other people who started investing very early - my first stock trade was when I was 8 or 9. Back in the day, they actually handed over physical stock certificates and those also came with coupons for annual dividends. While those were nostalgic and fun, I'm glad I don't have to deal with the paper anymore. My favorite account - hard to say. I seem to have multiples of each (2 HSAs, 1 Roth IRA and 1 IRA needed to feed it, 2 401ks+1 foreign one, 4 brokerages, several HYS's and bunch of other more random items) - a potential topic for future video would be: to consolidate or to diversify and why for each.

I too initially wanted to retire at 40 and have since expanded my time horizon. I just see so much potential for where I want to grow professionally, so I don't want to artificially limit myself to 40. This doesn't mean that I am not saving as much as I can though, still need to be flexible just in case.

You should talk about estate planning how complicated it can be when someone receives an inherited IRA. One of main reasons why I like the brokerage account. When someone inherits a IRA that isn’t a spouse they need liquidate all the holdings after a certain amount of years.

May not apply in one's situation but an HSA account is a good investment which will help with having more funds to invest in other accounts. Also for lower income individuals that still owe taxes, Form 8880 Income Savers Credit can pay over 50% return in some cases by both lowering taxable income and reducing tax on that lowered income and you still have the money invested.

Very good video! I also moved a lot of my cash savings (about 1/2) from a money market account at my bank to a money market fund at my brokerage. But…it may not be fair to compare a money market account to a money market fund. While still generally safe, a fund carries risk that an account does not. They’re not the same thing. 😊 I also much prefer my brokerage account because I buy and hold, a lot of it which is in 31 individual stocks, that have very low tax consequences and no fees. I think the tax efficiency of retirement accounts is over sold. I enjoyed your video.

Yes you definitely need a brokerage account and fund every month just like the retirement accounts

Long term cap gains rates are pretty good right now but all signs points to those rates going up, possibly significantly.

My favorite account is my solo 401k through Vanguard because it has the highest limits and the tax breaks. I also fund roth and brokerage for different reasons. Time to get my hsa going. Nice channel.

None of us KNOW what the 'end of life' will be for ourselves. I'm 79. My dad was mentally sound and died at 70. My mum had dementia before she was 79. I don't have dementia. But I came close to dying Dec 2022. Jsn 2023 they fixed me, TAVR. I'm better now. Since then I cashed in sever $K of I & EE bonds and invested in a special rate bank CD and stated a T-bill ladder. People are so lucky to have smart people like you on U Tube. 50 years ago everybody was only on their own.

I see this mistake over and over on financial channels. You are correct the Roth IRA balance would be much more however you must state you first have to have the ability to deposit the same contribution on an after tax basis (which may be up to 34% more) in order for your comparison to be accurate. But overall you are doing good work encouraging people to save

Thank you for this fresh perspective! I needed this! I thought you’d say HSA or Roth like everyone else and I always feel bad watching others videos that say these. I have to choose a PPO for a special needs child and I make too much for a Roth and have a rollover 401k so can’t do a backdoor Roth. Most of my savings go to my brokerage esp since my employer doesn’t match 401k. i felt like i was doing something wrong.

I have a variety of account types, A 401k that I rolled over to a Traditional IRA when I retired at 56, a Roth IRA, a couple Brokerage accounts, and 529s for my college age kids. All with a variety of advantages and disadvantages. That said, I think the best account type to have is the HSA from the standpoint of its triple tax advantage, which unfortunately, I don’t have as I never had an HSA eligible health plan :) I did setup custodial accounts for both my kids when they were young teens. One of them caught the bug and is actively involved in investing, the other not as much, but the money continues to grow in both cases.

Thanks for focusing on a brokerage. Going into Social Security draw years, the combination of a Roth and brokerage can result in 0 federal taxes, which is a huge part of the goal. Pensions and traditional accounts result in large tax bills on Social Security and possibly capital gains. The next gen worker should understand pre-tax, tax free, and brokerage (also can be tax free) to maximize income in retirement.

My favorite is my Solo 401K w the back door Roth. I also love my Roth IRA that I opened years ago. My brokerage is my in case of emergency, break glass account. My trad IRAs are the red headed step children, but they are still a part of my overall portfolio.

Much of my equities are in individual stocks rather than funds. Over time I noticed that the funds take a lot of money to manage the assets. That is money from me and every other investor. So, I stick to companies I know and like for the long term. Since I am in tech that sector dominates my portfolio.

I love my 457b early withdrawals with no penalties when I terminate employment! Going to hopefully help me retire early!

Such great content! 👏🏻 Taxable brokerage account FTW! Also my fave. Although now that I’m mid career and in a high tax bracket, maxing out my 401K is a priority. I will be able to access those funds at 55 anyway, even though I shouldn’t need them, so not so bad. My breakdown: 65% taxable brokerage, 25% rental real estate equity, 7% Roth and 3% traditional. That 3% traditional will climb quickly over the next 5-10 years before semi-retirement and a tax free Roth/HSA conversion plan.

OMG, You're so lucky to have started so young. You're going to be rich AF lol if not already. I didn't even know that was a thing to invest directly to a mutual fund. I thought you had to use an IRA or 401k for retirement. I have a fidelity account so I'll get to work Thanks

An investment vehicle is what a brokerage account or roth ira, etc is. A place where you can purchase securities or stocks, etc. It isn't an index fun.

Another thing that needs to be strongly considered is the company that sponsors your brokerage accounts. So far, one of the best I've seen is Fidelity. The rates of return for their cash sweep accounts are very generous and I don't seem to pay any commission for Fidelity-based mutual funds. If their UX design was a little more like Ameritrade was, especially for realized gains and losses, it would be even better.

Hi Erin , I am 62 years old and I live in Canada and work as a hunting and fishing guide for 20 weeks a year. My favorite investment account is one where I invest in GICS at nearly 5% interest rate and get interest payments monthly . It produces $3400 Canadian each month , enough money so that I do not have to be employed in the winter . I have been investing for nearly 40 years and it really has paid off by freeing up my time . Byron .

I watched an earlier video of yours where you talked about maxing out your Roth IRA before the end of June. So I moved money from my brokerage account to my Roth IRA to max it for the year. Was this a smart move or would you suggest using take home income instead?

"Icing on the cake" for Social Security, interesting. I plan to use it for my yearly income at 70. I plan to take my brokerage accounts and pass them along to my children. Currently debt free and will be at FRA in December of 2023.

Glad to see another person who started investing young (beginning to think I was just weird 😢) My parents always invested and when I started high school my dad asked if I wanted to try (with a custodial account) YES. Used my saved money from odd jobs, birthdays whatever. Don't remember if I even had an allowance, just didn't spend much. Traditional brokerage still my favorite, have traditional and Roth IRA's and a 401K at my employment, rolled other 401K into IRA's.

As a USA expat in Asia I am only legally able to use brokerage accounts and buy stocks or etf’s. It’s my total strategy and I’ve been amazed at how hard it was to get help sorting it out. The book Millionaire Expat, and Charles Schwab were to only real help to me for this situation. Would love more dedicated content on expats.

HSAs are my fave for triple tax advantage - tax free contributions, tax free growth and tax free distribution

Erin I think part of the reason that the Brokerage account is your favorite is due to your investment style - buying low cost index funds and never selling them. For those like me who trade positions several times a month, tax free accounts are easier. My 457b plan allows no-penalty withdrawals starting at 51.

been in Roth since they started (including converting my IRA at that time), been in brokerage accounts since college (wished I have started earlier), and 401k's since first job. DCA monthly rain or shine, bull or bear. Sprinkled in the magic time pixy dust and wholla, and when mega corp decided to outsource my entire department unexpectdly, I didn't care a bit from a financial perspective . Roth is my fav because of the tax free component and contributions can be withdrawn at any time without penalty or taxes. Erin. Don't do the 70 route - 45-50 is good. Time is finte.

my favorite account is brokerage accout where i can invest anything myself and withdraw and deposit anytime unlike 401k, etc...

I think, for me, my favorite account is a Roth IRA for the following reasons: (1) assuming no withdrawals of earnings are made until after age 59.5, said earnings completely escape tax, (2) there are no RMD's during the account owner's lifetime, (3) pre-age 59.5 withdrawals of cumulative contributions can be made penalty-free and tax-free, and (4) pre-age 59.5 withdrawals can also be made penalty-free and tax-free if done after the 5-year post-conversion clock has run out.

Great video and discussion. Generally I dislike traditional banks, but I absolutely love Schwab Bank. All the necessary benefits of a bank plus an integrated brokerage account. Separately, when I was self employed and a small business owner I used a SEP IRA. Best decision ever. Recently retired at 65, although the original plan was 59 1/2. I had to wait for affordable medical insurance (Medicare) for the numbers to work. Can't get it before 65.

I love my high yeild savings account with my existing credit union. Just moved the money from my regular savings account over to get a much higher interest rate at the same institution. Only drawback is the minimum account balance, but as long as I don't get below that I get a decent rate at my existing provider.

One of my accounts is a Ragnoroth. It's in my Asgard account. 🙃😛

What editing app do you use for your videos?

Read content, good video. I’m sure you’ve already know this but it wasn’t mentioned, is the importance of loss harvesting. If done correctly it should be able to wipe out any taxes you would pay on gains.

thanks for the great content!

Thank you - great video! If I am using the 3 bucket strategy in retirement (401k, Roth and brokerage) what is the best strategy for withdrawing? Are the 0% long term capital gains counted after my 401k or Roth distributions? Meaning, If I can take up to $89k out of a brokerage with no tax implications, is that number deceased by whatever I take from my 401k or Roth.

We are new to the USA and looking for a financial advisor or a platform we can use to manage all our investments. What’s your advice? Thanks

I have had a brokerage account since I left college in the late 1970's (when I was in my early 20's). And I have maxed out my 401k's at every employer that offered them. Whenever I left an employer (they kept going out of business!) I rolled over the 401k into an individual retirement account. I still have an individual brokerage account, a regular IRA, a Roth IRA, an employer 401k, and three roboadvisor accounts (I am comparing how they work).

My favorite is a self directed retirement account. It cost us $2,500 to set up and another $1,500 every 6-7 years to update. BUT, you can invest in virtually anything - ie real estate, make loans, and much more. The upfront tax breaks are amazing and we’ve had years where we sock away over 50k (we too are super savers). Plus our income looks so low we qualify for some added government programs. Yes we have to wait until we’re 59.5 to make withdrawals, but there is no way most folks will retire before that age.