How I Invest Across 5 Different Accounts to Maximize Growth and Minimize Taxes

Here is exactly how I invest my money across five different accounts to maximize growth and minimize taxes. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free so you don’t have to pay for it.

1. Taxable Brokerage Account

My first account is a taxable brokerage account. I use Fidelity and invest 100% in low-cost index funds like Fidelity's FXAIX or Vanguard's VOO. Unlike mutual funds, REITs, or dividend stocks, these funds do not distribute annual earnings. As long as I stay invested, I avoid triggering taxes each year and allow my investments to grow uninterrupted.

2. Roth IRA

Next is my Roth IRA. Because this account is funded with post-tax dollars, the 30 to 40 years of compound growth will ultimately be tax-free. In this account, I invest in more aggressive funds like QQQ. While its historical returns of 13.5% annually outperform the S&P, it may not be suitable for those who can’t stomach downturns.

3. SEP IRA

My third account is a SEP IRA. I contribute the maximum of 25% of net earnings from my small business, investing 90% in low-cost index funds and 10% in real estate investment trusts (REITs). The REITs provide some exposure to real estate, and I can defer taxes on their annual payouts.

4. Rollover Traditional IRA

Next is my rollover traditional IRA. This is where I’ve consolidated all of my old 401(k) accounts, eliminating the risk of forgetting about them and avoiding hefty administrative fees. In this account, I'm 100% invested in FXAIX for simplified management.

5. Roth 401(k)

Finally, my Roth 401(k) is where I contribute 15% of my W-2 income plus a 4% employer match. Since these accounts are often limited by available funds, I switched away from the default target date retirement fund—which had high fees—to a low-cost option that tracks the S&P 500.

Conclusion

Each strategy is designed to optimize growth and tax efficiency. If any of this information is helpful, please like and follow, and I’ll keep trying to get you one step closer to where you need to be.

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