14. Now that all of your tax shelters (Roth/IRA 401k/403b) are maxed out open an online discount brokerage account.
Once you are sufficiently saving for retirement by maxing out your tax shelters, It's time to open a taxable brokerage account. For convenience I have one at the same place I keep my Roth/IRA. This is a great place to invest money that would otherwise sit idle in a bank account (Not your emergency fund!). It's also a good place to put any found or sudden money. As always, Watch those fees!
Tax efficiency - There is another way to think about diversification when using a brokerage account. If you put tax advantaged investments in your taxable brokerage account you can free up potential in your non-taxable Roth/IRA or 401k/403b. Since Treasuries or Municipal bonds are already tax exempt you could hold these types of investments in a taxable brokerage account.
I am not quite there yet but I do have a brokerage account just in case. My Roth IRA is maxed out but until my 403b is maxed out I won't touch the brokerage account. I am ready for any found money though!
No comments:
Post a Comment