3 Key Benefits of a Taxable Investing Account

Here the primary reasons I invest in a taxable brokerage account for all of my individual stocks. Most people have a 401k or IRA where they invest to earn tax-free gains, but withdrawing that money early can lead to penalties that go beyond the normal tax rate. This video shares some ideas for using a taxable investing account to build your liquid assets and purchasing power.

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Some of the benefits discussed in this video include liquidity, tax loss harvesting, and credit building. Make sure you talk with an accountant before assuming these benefits will work for your unique situation.

Do you invest in taxable brokerage account? What are some of the reasons your prefer this approach? Share your ideas in the comments!

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[Mr.conserv]

I didn’t know money a taxable account could help with with creditworthiness. That’s very interesting

[Logangil]

Do you think another advantage is that you can put as much money as you want into a taxable investment account vs the low maximum amount of $6, 000 dollars per year for a traditional TSP/Roth IRA?

[daveschmarder-]

About 2/3 of my bucks are in taxable accounts, with the rest evenly divided between IRA and Roth. I worked for a small company and never made a lot of money. No 401k was available. In retrospect, having no 401k was my good fortune. In retirement, I can now "modulate" my taxes by deciding where I get my living expenses. My upcoming RMDs in 2 years will be very manageable. As soon as the Roth came along, I shifted my IRA contributions to Roth. Now I'm doing modest Roth conversions. This video was a good topic, Geoff. I hope my little story of what the future could be helps your viewers realize your great information. PS, all those long term cap gains are 0% tax!

[makdaddy]

For a very minimal amount, I placed a substantial amount of money into vanguard using their account managers. It has worked out great and I feel they completely understand my goals and objectives. Reaching them to discuss changes or anything else is easy. It is also a learning experience watching how they spread out the account into the various eta's, bonds etc.

[connerhobbs]

Love point #2. Thanks for explaining that

[stephenwright]

I wish I had more evenly split my retirement funds. I have too much allocated to the 401K. It’s not the end of the world, I’ll have to do some strategic Roth conversions to balance out the accounts. Only putting in enough to get the match now in the 401K, maxing the Roth & HSA, and the rest to a taxable account.

[doctorhorton]

Great topic Geoff! Thank you! My taxable account is my future dividend income account. Currently doing drip but in the future may use the dividends for cash flow 💵

[ticktology]

Awesome topic for a video Geoff. Usually people push the Roth or traditional IRA, so this is great. I also use Ally for savings, checking, and investing, and I highly recommend it to others. It’s very convenient to transfer between accounts almost instantly and have those funds fully settled to trade with. This is a great way to help save money since it is not as accessible and also protects against inflation. If my money just sat in a savings or checking, I would eventually find stupid stuff to buy lol. I am hoping that Ally builds on their investing platform to include more features that other brokers have and maybe add better after hours trading. It doesn’t matter too much if you’re investing for the long term though. Thanks a bunch man 👍🏼😎

[dvillanueva]

Is taxable account the same as a Joint Investment Account? If so do you recommend it for later as an inheritance to kids?

[PB_V]

Taxable accounts currently have some tax advantages to a 401k type account because they have qualified dividend and long term gains tax rates lower than your tax brackets. 401k - everything is taxed at your tax bracket when you take it out in retirement. If you are in a lower tax bracket in retirement that may change the advantage, but I plan on retiring in a higher bracket than now if possible.

[juniorateufackmekontchou]

Hey thanks for sharing this great information. Please how can I get one

[andersneldebergnielsen]

As you mention a key benefit to taxable investment/savings accounts is that you can take out the cash without having to worry about penalties. The rules for access to 401k or Roth type accounts vary from country to country (I am not a US resident), but in some countries you are only able access the cash/investment when you reach a certain age eligible for retirement. Therefore taxable investment accounts may be a better option if you plan to retire early and live off your investments (FIRE strstegy). However it will depend on the pension/retirement fund regulations of each country

[richardboyer]

I know you’re not a financial planner but Do you think it’s a good idea to put an emergency fund in a taxable brokerage account?

[ronaldrutledge]

I have a self directed brokerage account w/Vanguard already but when I start to do the Roth conversion ladder later on will I need to open up an IRA also to get that going or can I utilize my brokerage account?

[vinittodi]

As a new investor I have been using robinhood and Webull. Are those ok to use from tax perspective?