Finally someone is saying it, I don’t understood why more people aren’t sharing this exact message. I have enough already in retirement accounts that it will be worth millions when I turn 59.5 even if I never contributed another dollar, so why not focus on a brokerage account so I can retire earlier than that if I choose? Instead everyone is just so focused on tax advantages that they say to max out the retirement accounts anyways but that’s just one piece of the puzzle, your actual future plans need to be taken into account as well.
What people also don't talk about enough is the advantages of using a taxable account as collateral for a securities backed loan or line-of-credit. Since loans aren't considered taxable income, no taxable events are triggered, but you can still get access to your wealth and your securities continue to grow in value. While it's possible to borrow against a 401k, taxable accounts have the advantage of not having contribution limits.
So I recently had this thought. I was like wait a minute, capital gains are way lower than income tax! Had to cone look and see who else had thought this
It seems to me having money in all three (Roth, Trad and taxable brokerage) is best for flexibility in pulling income and managing taxes in retirement.
I'm a little worried about how pineapples are involved in investing... I do feel you missed an important feature of an employer's 401k, which is that it often offers some sort of matching, which is FREE MONEY! Don't pass that up, even if you have to wait to access it and for it to be fully vested. Also, my 401k plan offers the ability to take out a loan against my investment, essentially borrowing from myself at a very low interest rate. It was a great option for me to allow me to put a down payment on my house when we suddenly needed to move. But, yeah, there's a reason investors use taxable brokerage accounts... taxes are still really low for average people!
@@NoWeyJose I think any company can go under in a “sudden” turn of events that were actually hidden and years in the making. FTX was operating in a wildly unpredictable space doing what seems to be wildly foolish things so they were on borrowed time. Hopefully the platforms we use have a more solid footing from existing regulations, ethical practices and leaders with more wisdom.
My job allow me to put 23k into my Roth retairement account with a 7% fixed interest AND $23k into my Roth 457 invested in Large, medium and small caps investment funds. Do you think that I’ll need brokerage account too? Thank you for your great videos.
If you want more flexibility than those accounts allow for (in terms of being able to access the money before you retire) then maybe you'd want one, but it sounds like you're absolutely crushing it!
the benefit to retirement accounts is that they force savings since you can't take the money out whenever. but yes I think most people would benefit from taxable brokerage accounts since with the deductions, they'll likely not actually be taxed on it. so like a roth ira plus an hsa plus taxable is a real good combo
Good video... But I have to take issue with the use of the term "tax free". You're still paying taxes whether it's a 401k, IRA, Roth or taxable account. The difference is when you pay taxes. 401k and Traditional IRAs are pre-tax, where Roth and taxable accounts are post-tax. The difference there is that with a Roth your growth is never taxed, and in your taxable accounts your growth may be taxed. Just do a little simple math and you'll find out that there is virtually no difference in how much tax you pay when saving in any of these accounts assuming that your tax bracket is constant. You will always end up with the same amount in the end.
That's shockingly inaccurate. You realize you're going to start with 20-40% (depending on your income tax rate) less money in your brokerage account compared to a traditional retirement account, right?
Great information! But anyone out there can you tell me what to invest long term to get sure income every year so we don’t have to pay tax. I mean sure way making money not losing money every year. Thank you.
There’s pretty much no such thing as guaranteed income. You could use a savings vehicle like CDs or savings accounts or venture into the fee-infested waters of annuities or reverse mortgages etc but those returns will be lower than investing. There’s no such thing as a guaranteed high return that’s risk free. If anyone promises that they are lying.
I am happy with my 2 5 year, Fixed Index Annuities. And my 4- CD Ladder.. Of course I am not having to draw off of it at this time.. I got really tired of the yo yo stock market.
Wow, talk about timely. Approaching retirement age and my wife and I have a significant brokerage account (and lots in IRAs 401ks). I was actually thinking I’d made a big mistake having too much outside of retirement.
Depends on how you want to do taxes and how available that money needs to be. Your way makes it more available but less tax friendly. If you got the match, maxed IRA, then went back to continue on the 401k, you’d get more tax breaks. But then the money is locked behind penalties etc. What’s your priority?
thank you thank you for talking about this. I can only really afford to invest in 1 account and have no 401k. everyone says roth ira or your doing it wrong would it be bad in my case if I just went full force on taxable accounts in your honest non financial advice opinion ?:)
@@BrendanEvan that comment is the best advce iv gotten. nothing anywhere i search gives me answers to anything really. and its not that im looking for stuff to tell me its better. its just like.. is there any info on this topic. LOL this video is the first one that i have found that even remotely touches the topic iv been looking for. so again thank you.
Taxable is by far way better. Trust me. With Taxable accounts, you can invest into riskier assets that give you way higher returns so that the tax penalty barely has an impact on your portfolio.
Well I mean that kind of depends because with Roth you pay that tax now so in a high income taxed state like cali you may be paying a lot in taxes especially while you’re working depending on your income where if you use a traditional account like a 401k you save on state and federal income tax and then say move to a no income tax state then pull the money without paying state tax but still pay federal.
@@whasian2007 You make some valid points. However, when I'm that old taxes are the last thing I want to be concerned about. The mental freedom of tax anxiety is worth the tax hit early in life.
@@akin242002 I think that’s totally fair, sometimes it’s worth paying a little more to have that simplicity instead of always having to optimize everything. I personally enjoy the optimization and the nitty gritty details but I know that’s not for everyone lol
