Select Page

Today, we’re talking about something that’s crucial to your financial success: understanding how investments get taxed. Did you know that the way you invest can impact how much you pay in taxes, and ultimately, how much money you have to achieve your financial goals? In this video, we’ll break down the three tax categories of investments and explain why they matter to you.

The first tax category is tax now, or taxable investments. This includes stocks, bonds, mutual funds, savings accounts, and CDs. With these investments, you pay taxes on any dividends or interest earned each year, which can reduce your investment returns and limit your financial growth.

The second category is tax later, or tax-deferred investments. This includes Traditional IRAs, 401k’s, 403b’s, and annuities. While you don’t pay taxes on the money you contribute, you will pay taxes when you withdraw the money in retirement. This can impact your retirement income and limit your financial flexibility.

The third category is tax never, or tax-free investments. This includes Roth IRAs, permanent life insurance, municipal bonds, and college savings plans. With these investments, you don’t pay taxes on any of the earnings or withdrawals, as long as you meet certain qualifications. This can provide a huge tax advantage and allow you to maximize your investment returns and achieve your financial goals.

By understanding the tax categories of investments, you can make informed decisions about how to allocate your money and maximize your investment returns. Whether you’re investing for retirement, education, or other financial goals, understanding the tax implications of your investments is key to your financial success.

Thanks for watching. We hope this video helped you understand how investments get taxed and why it matters to your financial goals. If you have any questions or comments, leave them below. And don’t forget to subscribe for more financial literacy content. We’ll see you in the next video!