Thu Dec 26 2024, by Tyler Gardner

Top Four Reasons to Prioritize Funding a Taxable Brokerage Account Each Year

I'm Tyler, former financial advisor and portfolio manager. I make financial content for free so that you don't have to pay for it.

1. No Income Limits and No Contribution Limits

If you want to invest a quarter of a million bucks this year, you can. The flexibility of a taxable brokerage account allows you to contribute without any restrictions on income.

2. No Penalties for Withdrawals

One of the best features of a taxable brokerage account is that there are no penalties if you ever need to take back the money. This accessibility makes it an attractive option for many investors.

3. Favorable Tax Treatment on Capital Gains

Don't let the name 'taxable' fool you. If you hold on to your assets for more than one year, you will be taxed at a much lower rate on those capital gains compared to ordinary income. This is significant, especially heading into retirement or for those in a high tax bracket seeking extra income.

4. Supplementing Income During Retirement

This is the account I will personally use to bridge my life from the ages of 62 to 73. I need to supplement my income on top of Social Security, allowing my deferred tax and tax-free accounts to continue to grow for future needs.

If any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

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