These are tax free $. Income earned is generally not subject to tax (learn and follow the rules). Examples: Roth IRA, HSA (Health Savings Account) , Myra, 529 Plan, Municipal Bond Funds, Municipal Bonds, certain inherited accounts, etc.
This information is necessarily very general. Ask for more information as it applies to your own situation.
The different "buckets" can utilize any of the different types of accounts described above*. For example, you could have a Roth IRA at your bank and also have a Roth IRA with a mutual fund company.
Whether you are just starting out or trying to manage a large portfolio, the concepts shown here apply to everyone and are easy to learn and implement. Your money goes into different " tax buckets", each with it's own benefits. Learn the different types of buckets and try to put some money into each one.
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Brokerage Account - there are many brokers - some with "bricks and mortar" offices and some who operate online only. You can buy almost any type of investment inside a brokerage account. For example, you can buy mutual funds, individual stocks and bonds, certificates of deposit, and U.S. Government securities.
*Employer sponsored plans will have certain limitations.
Savings Accounts - look for an account with no fees. Online banks like Capitalone360 and Goldman Sachs offer higher rates if you're willing to do business online.
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"After tax $"
Tips on what to look for regarding the different types of accounts:
These are $ you have already paid tax on. Income earned on this money is reported each year on your tax return as it is credited to your account. "Pay as you go"
Examples: Savings Account, Mutual Fund (non-IRA), Brokerage Account (non-IRA).
These are $ you have sheltered from taxation now and will pay tax on when you take distributions. "Pay later".
Examples: 401K, Traditional IRA are the 2 most common types. Interest earned on savings bonds or non-qualified annuities are also tax deferred (the original investment is made with after tax $ and won't be taxed when you cash it in).
Annuities - these are issued by insurance companies. There are 2 basic types: Fixed and Variable. Look for insurance companies with high ratings.
"Tax Free $"
Creating a tax efficient portfolio
Mutual Fund - there are tens of thousands of different funds. Ask us for general information on where to start if you are not sure where to go or how to proceed. You only need a couple funds.