Advantages of a Taxable Investing Account

A “taxable” account or non-qualified brokerage account is often viewed in a poor light, but it really deserves a much better name.

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More than half of my retirement assets now reside in our taxable account and I pay little in the way of taxes on it.

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Advantages of a Taxable Investing Account

You can get at the money anytime you choose and spend it on anything you want, with no restrictions.

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You can buy stock/ETFs at many brokerages for basically no commission.

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You probably shouldn’t, but if you wanted to you can get a “margin” account, which allows you to use leverage to magnify the upswings of your investments.

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When your investments pay you qualified dividends (most stock and stock mutual fund dividends), you get to pay taxes on it at a lower rate than usual.

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When you sell an investment that has appreciated in value, you have to pay taxes on the increase in value.

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You can buy investments that are naturally tax-efficient such as tax-managed funds and index (especially total market index) stock funds.

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This concept takes a bit to wrap your head around the first time you hear of it. But if you persist, it will be worth your while.

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Advantages of a Taxable Investing Account

A “taxable” account or non-qualified brokerage account is often viewed in a poor light, but it really deserves a much better name.

More than half of my retirement assets now reside in our taxable account and I pay little in the way of taxes on it.

Advantages of a Taxable Investing Account

You can get at the money anytime you choose and spend it on anything you want, with no restrictions.

Liquidity

You can buy stock/ETFs at many brokerages for basically no commission.

Low cost

You probably shouldn’t, but if you wanted to you can get a “margin” account, which allows you to use leverage to magnify the upswings of your investments.

Margin

When your investments pay you qualified dividends (most stock and stock mutual fund dividends), you get to pay taxes on it at a lower rate than usual.

Reduced Dividend Tax Rate

When you sell an investment that has appreciated in value, you have to pay taxes on the increase in value.

Reduced Long-Term Capital Gains Tax Rate

You can buy investments that are naturally tax-efficient such as tax-managed funds and index (especially total market index) stock funds.

Tax-efficient investments are available

This concept takes a bit to wrap your head around the first time you hear of it. But if you persist, it will be worth your while.

Tax-Loss Harvesting

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