My Favorite Investment Account & Only 35% of Investors Use It

[@Kep19901]

I thought for sure it would be the HSA.

[@Andarius]

That was my thought as well. Can't think of anything that really beats the tax advantages. Worst case it can act like a pre-tax retirement account.

[@ErinTalksMoney]

HSAs are wonderful! How can you bet an account that can offer triple tax advantages!?!? But I still like the freedom of a brokerage 😊

[@mzcain1521]

Same here …

[@brentdyer1320]

Hsa is my favorite as well. Tax deductible, tax free growth, and can use it for any medical expenses.

[@Kep19901]

@ErinTalksMoney I believe i have heard it being referred to as quadruple. Lowers taxable income, it comes out before fica, invest it, and withdrawals are tax free for medical expenses.

[@bartbradshaw]

I thought I was the only one with this preference. I like tax advantaged accounts, but I LOVE the freedom and flexibility of a regular taxable brokerage account. No withdrawal requirements or limits, no contribution limits, just good old fashioned complete flexibility and freedom.

[@HildaBennet]

It may be a good idea to speak with a financial advisor who can help you develop a portfolio based on your individual goals and risk tolerance.

[@stephenwright133]

I have 401K, Brokerage, HSA, and Roth accounts. If I could go back and do it again, I would have put more emphasis on the brokerage account. My opinion, 401k up to the company match, Roth IRA, HSA, and then brokerage account for the rest. YMMV depending on your specific situation and goals. No harm, no foul though. I ran the numbers and retirement is now less than a year away. I was going to wait until the end of 2024, but after looking at things I moved that up to June 2024. The simulators are giving me a 97 - 99% chance of success. I can't make more time, so I might as well take the leap.

[@thirdman1228]

Excellent channel. I have my 20-something year old kids watching your channel as well. Financial Literacy education at its best

[@ErinTalksMoney]

That is awesome!

[@timp7412]

A brokerage account was a great place for us to hold our money while we saved up over 7 years to make a 20% downpayment on our first home. -- We wouldn't have been able to do that if we had only held it in a savings account. Brokerage accounts are great for multiplying money you want to use before retirement, and, obviously, retirements are even better for multiplying money you will use in retirement accout. Like you said. -- Having options, and using those options are great.

[@j10001]

Roth IRA is my favorite because, like a brokerage account, you can access contributions if you need them. That’s a valuable option that lets you take a little more risk with other funds than you might do if the Roth money were locked up for decades. Also, the earlier you start investing, the more valuable that Roth is because the balance in your account at retirement will be mostly gains, not contributions, and you’d rather get those tax free.

[@neuideas]

You can set up a Roth in a brokerage account. The big limitation is you don't have margin, which means shorting is not allowed. Also, active trading is hampered some because you are waiting for each trade to settle before you can open a new position.

[@j10001]

@@neuideas Yes, by “brokerage account” I meant “taxable brokerage account” as the term is often used colloquially. Yes, a Roth IRA is almost always a self-managed brokerage account where you do your own trading. Agreed, a limitation of all IRA accounts is that there are regulatory limitations on the use of margin. However limited margin is allowed. Schwab, for example, allows you to apply for and be approved for _limited margin_ to cover trades clearing (so you can reinvest right away for a single trade, but not for repeated day trades), and they also allow you to apply for the margin needed to trade _option spreads_ with your Roth IRA. One could do any more-exotic option training in other accounts, if needed.

[@joet56]

Great content Erin. I like the brokerage account as well. Whats your take on having more than one brokerage account? Also have two retirement accounts as well.

[@PurvisTwiggs]

You need a third party to help you out. A financial planner or accountant can run through your figures, including your projected income and expenditures when you retire, along with your retirement goals, your emergency fund and any other strategies you need to put in place for such things as long-term care.

[@PurvisTwiggs]

@@AnatolyIvor hmm thats impressive I did some findings on, Loren really seem to know her stuff. educational background, qualifications was really impressive. Kudos and thanks for sharing. I left a note and booked a consult. Maybe I will get feedback

[@irenatrulove]

Thats impressive Ana. After working for 30 years I currently have less than 2 million put together after my husbands company allocation, despite the markets new highs we are finding it difficult to grow past the 2 million threshold after it depleted December 2021. We need some of the funds for our kids college and the rest to last us the next 15-20 years. This advisor Loren Lena Walker I have checked out and hope to consult with, I pray she gives me her time

[@wildtill9]

Love it. This is the 5th video of yours that I watched, and I now just subbed. And yes, I have a work Fidelity 401K, a Roth with Fidelity and a Vanguard account with little over 100K of index funds in it. Your advice is spot on - thanks

[@ErinTalksMoney]

Welcome to the channel!! 🙏😊

[@Rickpiet]

Hey Erin. I also LOVE the ROTH IRA. The ROTH is such a great tool for building your wealth. I helped my son to get started with the ROTH when he turned 18. I showed him the power of compounding. To be able to let your money build for 40+ years and then be able to withdrawal the balance tax free is awesome! Making the annual ROTH contribution is now a habit for him. He buys shares of a low cost S&P 500 mutual fund every January.

[@biocop]

If you invest in a school savings 529 plan, you can now do a Roth conversion, if you or your kids haven’t used all of the 529 money.

[@skiph507]

None of us KNOW what the 'end of life' will be for ourselves. I'm 79. My dad was mentally sound and died at 70. My mum had dementia before she was 79. I don't have dementia. But I came close to dying Dec 2022. Jsn 2023 they fixed me, TAVR. I'm better now. Since then I cashed in sever $K of I & EE bonds and invested in a special rate bank CD and stated a T-bill ladder. People are so lucky to have smart people like you on U Tube. 50 years ago everybody was only on their own.

[@Bob-yh7ir]

Love it. Couldn't agree more with the need for control and ease of access, thus a brokerage account. We have one for the very reason of wanting a bridge fund in early retirement to "bridge us" to when we an tap our 401Ks and IRAs. Having multiple buckets if you will to earn and pull money from is fun !!

[@BigNoseDog]

I max out my 401k and Roth. If I have anything left over, I throw it in my brokerage account and let it grow. I only dip into it if I need to make a big purchase like a car which only happens once every 10 years or so. I also treat it as a kind of insurance policy if were to develop a major health issue that isn’t completely covered by health insurance. It’s all index funds and, like my Roth and 401k, I don’t have to check on it frequently. I’m confident I’ll have enough when I retire.

[@gireeshkrishnamoorthy4172]

I am following exactly your strategy.. After watching your video , I am happy that someone else is also thinking like me .. I have hardly seen anyone follow this strategy and it was very difficult for me you understand the reason behind it ..

[@learning.finances]

Great video! I am big indexer too. I have a brokerage account and enjoy it. I only have four index funds in it. All four have low expense ratios (0.04 to 0.12) and either give off a higher % of qualified dividends (e.g., 80% or higher) or have low dividend yields (e.g., 0.5%) to reduce the tax drag. One of the four index funds is VTIAX, which gives a foreign tax credit which helps to reduce the tax drag. Anyways, great video!

[@PVLocalFirst]

Thank you for the video, one thing I'd like to mention is how the words economy and ecology have the same Latin root word, eco, basically translating to home. To me, this shows that to have a healthy home, we need solutions that are both economically AND environmentally intelligent. With this in mind, the Federal tax credit for Solar PV and solar hot water panels is 30%.

[@silverylotus]

Erin, I am a recent subscriber. I loved that you mentioned the custodian account, which we plan to open for our young daughters. Maybe you have talked about this in previous videos, but can you do a video on how you grow up to be financially responsible when the brokerage account was transferred to you? If there were any light bulb moments you remember from your childhood that paved your financial journey into adulthood? Our goal for our kids is that they will manage their finances well and avoid all the dumb mistakes we have made in our 20s through mid-30s. Thanks.

[@aaron1626]

Thanks for your perspective on this. I have a similar view and am buying index funds in my brokerage account but haven’t actually withdrawn anything yet. Is tax loss harvesting something we should consider if just buying index funds? Also, I’d like to know more about using charitable gift funds to reduce capital gains taxes too. Maybe you can elaborate on how to make the most of these brokerage accounts in future videos. Thanks again!

[@ErinTalksMoney]

I do have a video on brokerage accounts, index funds and tax loss harvesting: kzbin.info/www/bejne/hmmTgHuLqJ2KnZY&feature=sharec But I definitely need to make one on charitable contributions 😊 I’m happy to make loads of videos on brokerage accounts

[@stansumrall5582]

If you love what you do then keep doing it for as long as you’re able. If you retire early and don’t have something to get up for or look forward to doing then it’s just a ticket to an early grave. Balance is the key and of course taking the time to learn about good nutrition and get some exercise and most importantly is what you inherited from your parents.

[@WheresWaldo05]

If someone has no hobbies then they are pretty boring. I was furloughed for 6 months of the pandemic. A mid life mini retirement. Spent my days: running (as normal), golfing, fishing, making new things like mead and kombucha, watching content at night that i could finally get to, build an AR-15, got to the shooting range, go kayaking, more cooking of new meals, plus many other things. There was loads more i never ended up doing but could have. Retirement someday will be the same thing. This is why old people rot away sitting in their recliners. Not using their muscles so they become weaker more quickly. Makes it harder to walk. No lubrication of joints means arthritis more quickly. Etc.

[@dennisd9554]

Work until 70 if you WANT to work to 70. But plan so you don't HAVE to work to 70. I knew a lady that retired at 83, and that was only because her health got to the point where she really had to stop working. She didn't want to --- she loved her job. I remember her telling me about how her high school counselor told her that if she went to college she could become a nurse or teacher. She insisted she wanted to become a chemist!

[@Zachery_]

I for one would not want to work until 70, maybe I’ll have to, idk what life has in store for me, but I’d like to retire the day I have a grandchild, which I guess isn’t guaranteed

[@jacobjohnson4763]

Yes. Plan so you have the freedom to work when, how, or if, you wish. Far too many people put themselves in a position where life comes knocking and they didn't set themselves up to be able to pivot. Saving for retirement does nothing but exchange small inconveniences today for freedom tomorrow

[@matthewpope8738]

HSA is probably my favorite account, but I also do love the brokerage as well!

[@martywilliard]

HSA if one is young and just starting is a must ! Agreed! It’s the trifecta of tax savings. Wish I had access to it years ago

[@takethecurseOFFwashingmachine]

An HSA is a great account to have due to all the tax benefits it has. That being said, I believe they are only eligible to those with certain high deductible heath coverage. To me that’s a double edge sword, yes I would love all the benefits of that type of account. However I’d much rather have an affordable health plan with more comprehensive coverage. Those do still exist, particularly at certain government employers, but they certainly are not the norm these days.

[@martywilliard]

@@takethecurseOFFwashingmachine HEALTH is WEALTH. Our insurance is sick care vs well care. It’s busted. Health care IS an industry made to generate $$$ on sickness. It pays to be sick for those in this business

[@first_or_last]

I agree completely!! I love my Roth jea and my employer gives me a good match so I obviously take advantage However, my brokerage is my favorite because of the access and no limits.

[@BW-kv9wj]

The problem with investing a lump sum at the end of the year into your Sep is you’re losing the advantage of dollar cost averaging throughout the year. And the Sep is a significant contribution amount. If you invest a lump sum at the end of the year when shares have skyrocketed but the shares were much lower during the year, you just bought high when you could have bought low.

[@Joseph-fr1rs]

I see this mistake over and over on financial channels. You are correct the Roth IRA balance would be much more however you must state you first have to have the ability to deposit the same contribution on an after tax basis (which may be up to 34% more) in order for your comparison to be accurate. But overall you are doing good work encouraging people to save

[@Carnakr1]

The freedom play changed my view of investing this morning. Thank you for the insight.

[@mikesurel5040]

Love this video. The fact that you talk about benefits outside of taxes is great. I like Roth accounts for the benefits in addition to the taxes. I have never been able to save the % of income you mention here but if I had it to do all over again I would contribute to employer plans up to the match then a 50/50 split between retirement accounts and regular brokerage account. Taxes matter but they are not everything. As you mention long term capital gains are pretty awesome.

[@chuckfoster1945]

I like the way you think. I enjoy trading from my tax-advantaged accounts...downside to that is there's no deduction for losers.

[@mgray3279]

Thx Erin for the candid video about brokerage accounts. Like you, my first investment account was the brokerage. I started mine after college back in the mid-80’s and used it as a place for my emergency fund. Then as I started my professional work life, I worked at some small companies who had horrible retirement plans, so I too began investing in the Roth IRA when the max limit was just $2000. Agree it too hasn’t kept up with inflation and I wish we could put in more. At least now that I/we are over 50, can put the max of $16k in both of our Roth accounts.

[@j10001]

Huge credit to you for thinking through the tax bill on a brokerage account paying mostly LTCG tax. Too many people just blindly say Roth or traditional IRA/401k is always best. I find them naive. 🏆 for you!

[@yippie6862]

Three questions: 1) Do prefer VTSAX over its ETF equivalent? Why? 2) What will you do in your taxable account when you are older and want to reduce risk using Bonds? Most Bonds are tax inefficient. 3) What about having an HSA account? Thanks

[@ErinTalksMoney]

1. B/c vanguard allows for automatic investments in index funds - simple as that, otherwise they are darn close to being identical 2. I will change how I allocate my dollars toward investments if my risk tolerance changes 3. I have an entire video on HSAs 😊kzbin.info/www/bejne/r32oiouMerCbaNU&feature=sharec

[@yippie6862]

@@ErinTalksMoney Thanks for the answers

[@soniaorrantia4269]

@@ErinTalksMoney hello, what would be best for a brokerage account that I plan on leaving for 20 years? A ETF or index fund? I plan on investing $1000 a month after of course maxing tax advantaged accounts. I am so co fused on the best way to save on taxes. 😊

[@drbcrb]

As a person nearing retirement the key factor is time. Started investing early 20’s. 40 years of investing has produced great gains.

[@peterdavis9403]

May not apply in one's situation but an HSA account is a good investment which will help with having more funds to invest in other accounts. Also for lower income individuals that still owe taxes, Form 8880 Income Savers Credit can pay over 50% return in some cases by both lowering taxable income and reducing tax on that lowered income and you still have the money invested.

[@888strummer]

Terrific video; I hope some young people out there see this and follow this lady. Base income is huge as is discipline; some will always do better than others; but everyone can do well if they give it the max effort

[@marktaflinger6348]

Great advice. I wish every little girl or boy had a grandmother like Erin's.

[@nutria12247]

I have a brokerage (Fidelity), Roth, 403b, and HSA. I like them all, but the HSA is my favorite due to the tax advantages.

[@jacquelynahin]

Thanks for information! I love your videos! They make me think about investing and saving in new ways. You mentioned a pension in this video. I will be retiring next year from the Army. I'm looking for videos about pension and retirement planning. Do you have or can you do a video on this?

[@cheeveka3]

You should talk about estate planning how complicated it can be when someone receives an inherited IRA. One of main reasons why I like the brokerage account. When someone inherits a IRA that isn’t a spouse they need liquidate all the holdings after a certain amount of years.

[@g.t.richardson6311]

There is no choice , the law was changed after the fact, that it had to cleared out in ten years. many of us had no Roth option for much of our working careers. I’ve converted what I can in the window I had before pension kicked in.

[@cheeveka3]

@@g.t.richardson6311 that’s why I use a brokerage account don’t need things to be complicated.

[@mk1fourwinds62]

I’m certainly going to investigate this further. Thank you.

[@embercello9688]

Thank you, Erin! The info you've provided on your channel since its inception is what gave me the confidence to invest in a low-cost index fund for the first time via a new brokerage account I opened earlier this year. (And as you mentioned, also easily moved savings for competitive rates in a money market fund). I appreciate you and your channel more than I can express.

[@ErinTalksMoney]

That makes me so happy to hear!!! 🙏

[@coppedl1971]

Another great video, Ma'am. Now I know your grandmother got you started. I agree with almost everything you said in this except I have 95% of all our money in either a Rollover IRA or a Roth IRA both in brokerage accounts. Which BTW keeps us in the 12% tax bracket. I have to take 40k in RMD's now and I convert 40k every year and still stay in the 12% bracket for the most part. No pension to add to the annual income because I was able to take a lump sum. I tell my friends that I did not set out to stay in the 12% tax bracket it happened by dumb luck. I worked in a factory for the last 40 years of my working life and my wife raised our 2 children. We are in our early 70's and we have the lions share of our nest egg in 35 individual stocks that totals well into the 7 figures. According to all the talking heads being almost 100% in stocks at 70+ years old in a big no no, but when Covid hit I was out of the market in a matter of hours with stop losses in place. I think that having all our money in IRA and Roth works very well to keep us in the 12% tax bracket. It takes more than 100k a year in retirement and the Roth makes that happen. Two years ago we bought another house and I was able to $350k from the Roth and as know, no tax implications. You can probably guess that I have been converting for years. I think I am rambling now, I will stop. lol

[@arar983]

Thanks for the great content! I appreciate watching stuff that doesn't just state the basics like "always fund your 401k." I have all of these types of accounts except for Roth. I think of them currently as stage accounts. For instance, I have the after tax brokerage accounts with VTI and GLD, and that gives me the flexibility you mention w/rt early retirement or just taking a break in the career. But the tax advantaged accounts are also funded to the maximum, and are there for my full retirement years after age 59.5, and their untouched growth can ensure I have more when I need to spend more on health. So I am thinking my more liquid accounts can fund retirement up until around then, and the tax advantaged stuff can fund after that. And real estate can provide tax flow all the way through, or can be sold to convert to liquid brokerage accounts should I decide I am done with maintaining rentals.

[@frankish5314]

Nice explanation Erin. I can say retiring at 52 was perfect for me. The great thing about the brokerage account is as you say, you don't have to wait till 59.5. In fact we have been living on our brokerage (VTSAX) since 2014. Living on cap gains plus dividends has meant our Federal tax bill has been $zero.. In fact the challenge for us will be when to do ROTH conversions from our 401ks because otherwise the taxes are going to go WAY up when we hit RMD age. I put that in the "good problem to have" category..:)

[@METVWETV]

Ari Taublieb of Root Financial and the Early Retirement Podcast likes to call the Brokerage Account a, Superhero Account. Primarily because you have ready access to your funds before you may be eligible to access your IRA, this can allow you to retire early and or allow your IRA to continue to grow.

[@Mikesadventures-m2q]

That is awesome you started a roth at 18. i had a teacher explain that if you funded your IRA at 18 -23 and obtained a 10 percent return by the time you retired you could be a millionaire. Sounded good in 1981!

[@stevemiller1937]

My favorite account is my solo 401k through Vanguard because it has the highest limits and the tax breaks. I also fund roth and brokerage for different reasons. Time to get my hsa going. Nice channel.

[@WheresWaldo05]

An investment vehicle is what a brokerage account or roth ira, etc is. A place where you can purchase securities or stocks, etc. It isn't an index fun.

[@benschmidt5006]

I’m more impressed every time I watch one of your videos.

[@jeanjasinczuk7543]

I might have miss it but I did not hear the restriction on the income limit for contributing to a ROTH IRA. $153,000 for single filer and $228,000 for filing jointly.

[@jdgolf499]

I don't find myself disagreeing with you often, but since we are talking about opinions, everyone is correct in what they like. I love brokerages also, but I think some of the negatives you gave for the other options are missing the mark. You talked about restriction on access to money on Roth's, HSA, etc, but that's only partially true. With the roth, you always have access to the principal, and the HSA you always have access to pay for medical expenses. Also, both of those grow tax free, whereas the dividends and capital gains are taxed, depending on your income. For me, the order is HSA, Roth or IRA (depending on current income), and brokerage. However, I have a mix of all these, as they all play a role in financial planning, for tax planning. One final point. You talked about choices. With an IRA, roth or otherwise, and often 401k's, you have the option to invest in low cost index funds. I have a Roth and traditional IRA's, and a brokerage account with Fidelity, and because I manage them, there is no fee to Fidelity.

[@ErinTalksMoney]

All very wonderful points!! And thanks for sharing your preferred order 🙏 I still very much love Roth accounts, HSAs and even traditional retirement accounts. They all have their place in a portfolio. My other thing I might add, is that while most employers sponsored plans offer index options these days, and I would bet even more and more will continue to do so going forward, not all do. That was my intention when I said greater options and flexibility in brokerage accounts. 😊

[@jjmurray327]

Great Video! Brokerage accounts are great if you can resist the temptation of dipping into them for non-essentials. (its kind of like a big plate of cupcakes sitting in front of you...mmmmm cupcakes!). Also it is tough to stay focused on the right investments. Too often I feel that people invest emotionally or have knee-jerk reactions with their investments (too much money in investments that promise super quick growth). My financial advisor has been a godsend to me because I like cupcakes... he takes a small fee, but is well worth it. And he slaps my hand when I reach for those cupcakes. 🙂

[@ErinTalksMoney]

😂 I love it! Yes! You absolutely have to resist the temptation to touch it!!

[@bryanwhitton1784]

@@ErinTalksMoney But cupcakes, man. Ya' gotta have when ya' need em'.

[@ErinTalksMoney]

😂😂

[@hanwagu9967]

Hey, my lamborghini Huracan is essential🤣 Just because you have a taxable/non-retirement brokerage account doesn't mean you are actively trading/gambling. I apply the same boring index fund etf logic as I do in my retirement brokerage accounts, although I do like me some individual stocks.

[@jamilgotcher365]

My Dad had a financial advisor talk him out of buying Apple stock 20 years ago 😐

[@tarpontime7562]

Brokerage is my favorite as well. For the same unrestrictive reasons as yours. How do you have a pension being self employed?

[@JT-sl3ui]

I have a Roth IRA with Fidelity and invest in a couple different index funds. I also have a wros-tod brokerage account with Fidelity but I’m not sure if there is an annual maximum contribution amount. 👍🏻✌🏻

[@KayKay0314]

Another thing that needs to be strongly considered is the company that sponsors your brokerage accounts. So far, one of the best I've seen is Fidelity. The rates of return for their cash sweep accounts are very generous and I don't seem to pay any commission for Fidelity-based mutual funds. If their UX design was a little more like Ameritrade was, especially for realized gains and losses, it would be even better.

[@AC313_]

Fidelity cash sweep is so amazing. I’m getting a debit card from there just because of it. & stop messing with chase’s 0% lol

[@papasquat355]

Thanks for focusing on a brokerage. Going into Social Security draw years, the combination of a Roth and brokerage can result in 0 federal taxes, which is a huge part of the goal. Pensions and traditional accounts result in large tax bills on Social Security and possibly capital gains. The next gen worker should understand pre-tax, tax free, and brokerage (also can be tax free) to maximize income in retirement.

[@dandawson8128]

Read content, good video. I’m sure you’ve already know this but it wasn’t mentioned, is the importance of loss harvesting. If done correctly it should be able to wipe out any taxes you would pay on gains.

[@Jeff-gd8ev]

It's going to sound odd, but my favorite "account" has a zero balance. It's a HELOC. A HELOC affords you tremendous flexibility - it's a source of money available at an instant, for an unexpected expense or any reason at all. But keep the balance zero most of the time (i.e. when you're NOT experiencing a money emergency) so as to not pay any interest on it. Having a HELOC in your back pocket means you don't need an emergency fund or a low-interest savings account, allowing you to keep all your assets invested at all times.

[@Zachery_]

That’s nearly the same as a credit card

[@Jeff-gd8ev]

@@Zachery_ Good point, although the HELOC interest rate is going to be a lot less.

[@rarelycares8416]

Always plan to be able to retire by 55, I am so glad I did. Engineering tends to be a very age discriminating profession. Saw many coworkers get laid off in their 50's and struggle to find new jobs. I was still employed at 55 when I retired. I liked my job, but it was still a job and had a lot of hidden stress. Retirement has definitely been the best job I ever had.

[@waynehendrix4806]

Very well delivered. I have always rolled an employers 401k into my IRA pre-tax brokerage within 60 days of moving along. I can't imaging having a web of investments (fee deductions) in various employers 401k accounts. And if I want to buy (and do) some single equities, I can.

[@DewayneKinston]

Great show, which index funds do you invest in? Thank you.

[@hogroamer260]

My 2-1/2 year old grandaughter's Roth is in Schwab stock. She doesn’t understand finances yet but, it will be long before she's of working age! My brokerage account is a pita! Have to report intrest, dividends, gains. Being retired, I have full range in my IRA/Roth. My favorite, and last one I withdrawl from, is the Roth.

[@jodylarson4697]

How can your granddaughter have a Roth if she is not working? I thought someone must have earned income to be able to contribute to an IRA.

[@hogroamer260]

@@jodylarson4697 You are correct. She models for her mother's businesses.

[@mikebarnes2294]

@jodylarson4697 great question. @hogroamer260 great answer.

[@berg8970]

I'm a 19 %er...LOL. I love my Roth, Index funds, T-bills, and Money market accounts. I also Daytrade/ Swingtrade which I enjoy immensely.

[@jebssan9]

I love RothIRA, Roth401(k) and HSA....since they'll be tax free once I start getting distribution at 59.5 yo. Some years ago I did a lot of Backdoor Conversion which bump up my Roth account, so it currently in six-figure. I do have SEP, IRA and Brokerage as well, those are my first line of distribution when I retire next year. Your videos are very informative and suits the current events. Keep it up! Thanks Erin for you "humanitarian" work....

[@denniskirschbaum9109]

Your rationale makes complete sense and yet I benefited by NOT having unfettered access to my funds. I might have been tempted to dip in if I could have. I saved most of my money in a 401 and, of course I couldn't touch it until age 59.5. I also thought I wanted to retire at 40 but when I turned 40 I couldn't and I didn't want to. I was ready to retire at 58 and able to. I also assumed there would be no social security and now it is the "icing on the cake." You are doing the right things and you are going to be very wealthy. Good work figuring all this out so early.

[@hanwagu9967]

well, you could actually touch 401k before 59.5 but with penalties.

[@denniskirschbaum9109]

@@hanwagu9967 Right. But I wouldn't want to pay penalties.

[@728huey]

Not a fan of HSA's, particularly if you have health issues or expect to use health services more frequently (such as starting a family). Sure, you can invest in a very high deductible catastrophic health plan, but you never know if or when you may have a catastrophic health event that may possibly disabled even short term.

[@dannymckenzie3676]

So I have a traditional Ira, would like to convert it to a Roth just not sure how to go about it. I have 50,000 in the traditional any advice would be great

[@randymcleland9563]

I'm with you on the brokerage account as a favorite. As I've been focusing on where my increased savings is going for the past three years, I'm emphasizing Roth and Brokerage accounts and de-emphasizing a 401K that is not matched.

[@CasaDeLaRaza]

Glad to finally understand the capital gains tax on this account. Thank you!

[@bnytch]

You mentioned that the reason the brokerage account is because you have complete access to your money whenever you want. You do have access to the principal investment in a Roth, too, at any time….although that taking money from the Roth before retirement would be a poor decision.

[@BrianK-zz4fk]

agree you have full access to the principle put in but why would you

[@Kyzyl_Tuva]

I love your content and your presentation. Thank you.

[@stuartkelly4812]

Glad to see another person who started investing young (beginning to think I was just weird 😢) My parents always invested and when I started high school my dad asked if I wanted to try (with a custodial account) YES. Used my saved money from odd jobs, birthdays whatever. Don't remember if I even had an allowance, just didn't spend much. Traditional brokerage still my favorite, have traditional and Roth IRA's and a 401K at my employment, rolled other 401K into IRA's.

[@morebeer7673]

I do retirement accounts, not brokerages, but earlier this year I did take some "dead cash" out of my savings that was earning those awful rates, and get an I-bond at 6.5%, and also ladder T-Bills at 4 - 5% with Treasury Direct.

[@clintstetler2471]

Good points but the benefits of Roth 401k dollars have become my favorite. I know paying tax up front is not the best. But, really I will never miss that money. But the tax free growth appeals to me. Combine that with a personal Roth. Then if you get in trouble before 59 withdraw principle without penalty.

[@jukpaa]

Great content. I find it interested when I run into other people who started investing very early - my first stock trade was when I was 8 or 9. Back in the day, they actually handed over physical stock certificates and those also came with coupons for annual dividends. While those were nostalgic and fun, I'm glad I don't have to deal with the paper anymore. My favorite account - hard to say. I seem to have multiples of each (2 HSAs, 1 Roth IRA and 1 IRA needed to feed it, 2 401ks+1 foreign one, 4 brokerages, several HYS's and bunch of other more random items) - a potential topic for future video would be: to consolidate or to diversify and why for each.

[@ErinTalksMoney]

My first stock purchase was at 8 as well! It was Campbell Soup! I loved the little kids with their chubby cheeks - I even collected the Campbell soup trading cards 😂 and your right, it was so much more work then - we had to check the performance in the paper - I remember my little ink stained hands, place our orders by phone, physically mail the check. It was definitely a bigger ordeal then!

[@JBoy340a]

Wow. First trade was 8 or 9. I thought I was early getting started in my late teens!

[@jodylarson4697]

I was self-employed and turned one IRA into a SEP-IRA so I could take advantage of that higher limit. It was a good move! I do have a brokerage account, but it is not my favorite because I opened it and contributed to it just before the big slump of the last couple of years. I'm not an indexer, but I do have one index fund in that account. The managed fund has been doing better than the index fund until recently. I do follow the "set it and forget it" approach. I'm having a good retirement!

[@edwardtakenaka5647]

Thanks Erin…I 🙏 that all young people find you. Young wage earners, & I’m talking 16 + should develop your mind set toward being a super saver or just a saver. Future happiness starts at this point. A prophecy of comfortable retirement is what Erin has mapped out for all to see….I’d listen carefully….

[@srussel5]

Another great video as always. I've heard you mention index funds before and I'm actually going to include index funds in my portfolio. I bought two pharmaceutical stocks during the pandemic and because of their own potential misdeeds, I have taken an absolutely horrific loss on both stocks due to their infringement on other vaccine manufacturers. I'm diversified with no stock or sector having a majority holding in my portfolio, but both losing stocks have weighed my portfolio's performance down. I'm used to averaging between 15-20% annual gains. But picking stocks is a lot of work and even some potentially great stocks can underperform out of nowhere. Thank you for the work you do with your channel!

[@damondiehl5637]

Picking individual stocks is risky. You are much better off buying ETFs. Any one stock in an ETF can fail, but your ownership is spread across a whole group of stocks.

[@kckuc310]

Yes you definitely need a brokerage account and fund every month just like the retirement accounts

[@andichrist2000]

Long term cap gains rates are pretty good right now but all signs points to those rates going up, possibly significantly.

[@jerrym3261]

Options! Options are what you should be focusing on. Sure it's easy to figure the dollars but, you are absolutely right in saying your options are most important. One idea I didn't hear you mention was whether you are better off paying tax on income or capital gains. If you need money, do you really want to have to pay tax too.

[@peace2all]

My favorite is a self directed retirement account. It cost us $2,500 to set up and another $1,500 every 6-7 years to update. BUT, you can invest in virtually anything - ie real estate, make loans, and much more. The upfront tax breaks are amazing and we’ve had years where we sock away over 50k (we too are super savers). Plus our income looks so low we qualify for some added government programs. Yes we have to wait until we’re 59.5 to make withdrawals, but there is no way most folks will retire before that age.

[@habbadabbado5765]

Brokerage Account--Accessible? Yes! Taxable? Very much so!

[@pubmeatman]

Why would it cost you $2500 to set up and $1500 to maintain? You said self directed? Are you paying an advisor or a Brokerage company a commission?

[@Trombone119]

Your advice is always practical and helpful. Thank you.

[@constitutionalstacker5701]

IRA's are great, both serve a purpose. One for tax free growth, and one for write off's. Sadly, 5-8% which is what I average isn't enough. It's a small, very small part of my plan. Though I do like the write offs from my traditional as I have a lot of different incomes and it helps offset tax cost. I have to agree the brokerage wins out with a good overall investment plan of blue chips, high dividend ets, and some higher risk picks. And then of course options trading can really be useful as well at times. It's been said that "only the top 1% invest in stocks" and that's a bunch of crap. We ALL have the choice to invest in the market and it's honestly not that hard to have a great base and hit a homerun here and there. It's so easy to learn. Most just make that choice to stay poor and not put in the work.

[@kitwongsegacom]

my favorite account is brokerage accout where i can invest anything myself and withdraw and deposit anytime unlike 401k, etc...

[@jeanettecook1088]

You were so lucky to have a grandmother like that! I was taught to hate anyone who handles money... bank, post office, insurance agent, business people in general. I had to re-educate myself and adjust my attitude. I started investing later in life, but I'm doing fine. Thank you for an informative video. My favorite accounts are my three brokerage accounts. I also don't like IRAs ... but they are good for those who have trouble with self discipline. I've become a very regular and careful dividend and value investor. 🎉

[@HunterFishermanGathererPrepper]

Hi Erin , I am 62 years old and I live in Canada and work as a hunting and fishing guide for 20 weeks a year. My favorite investment account is one where I invest in GICS at nearly 5% interest rate and get interest payments monthly . It produces $3400 Canadian each month , enough money so that I do not have to be employed in the winter . I have been investing for nearly 40 years and it really has paid off by freeing up my time . Byron .

[@ErinTalksMoney]

That's awesome Byron!! Thanks so much for sharing!

[@rbbrfish]

GICS seems to be a classification model and not an investment vehicle. If you don't mind, how does that work? Or are you talking about Guaranteed Investment Certificates vs. Global Industry Classification Standards?

[@leisure057blank3]

I first invested in a managed mutual fund (I don’t think they had index funds at the time), or I didn’t know about them. The fund I invested in, I invested $13,000 and then I stopped. It was somewhere in the late 90s after like 8 years when things started happening. I would find out that a $10,000 capital gain distribution had occurred and I was gonna owe taxes on that. Oh no. I was working 2 jobs, never home, so I could invest in my work tax deferred account and a traditional Ira I have made so many mistakes over the years. Not switching to a Roth IRA was one.

[@tft24tft]

I like my Brokerage a lot And I like my backdoor Roth and Mega Roth I like my 401k that comes with my company match and contribution! So which do I like best, well it’s Personal for my age and financial situation. Being over 59.5 they now all have their perks. I guess having as many buckets full is the best strategy and then being tax savvy as you drain them. Great video Erin and interesting to hear how things change for us as we get older.

[@FIRED13]

been in Roth since they started (including converting my IRA at that time), been in brokerage accounts since college (wished I have started earlier), and 401k's since first job. DCA monthly rain or shine, bull or bear. Sprinkled in the magic time pixy dust and wholla, and when mega corp decided to outsource my entire department unexpectdly, I didn't care a bit from a financial perspective . Roth is my fav because of the tax free component and contributions can be withdrawn at any time without penalty or taxes. Erin. Don't do the 70 route - 45-50 is good. Time is finte.

[@KielNation]

As a USA expat in Asia I am only legally able to use brokerage accounts and buy stocks or etf’s. It’s my total strategy and I’ve been amazed at how hard it was to get help sorting it out. The book Millionaire Expat, and Charles Schwab were to only real help to me for this situation. Would love more dedicated content on expats.

[@hanwagu9967]

i'm not sure this makes any sense. What do you mean only able to legally use brokerage accounts to buy stocks or etf's? How else are you going to buy stocks and etf's? The word "legally" is also confusing. I presume you mean that you aren't eligible to contribute to an IRA because you don't have any earned income in excess of all your deductions and exclusions, primarily the Foreign Earned Income Exclusion (FEIE) and Foreign Housing Exclusion (FHE). If you income in excess of your deductions and exclusions, you would still be eligible to contribute to an IRA.

[@rickj4540]

I admire your knowledge. I wish I was as smart as you when i was your age.

[@tacrewgirl]

Very informational and helpful.

[@michaelbroadwell1264]

Just found your channel, awesome content! Is that where you store your emergency fund, then? (Money Market fund)

[@AltayHunter]

I'm surprised you didn't mention roth conversion ladders and substantially equal periodic payments. The money in your retirement accounts is certainly harder to access than that in your brokerage account, but as long as you can project what you'll need in five years it's still quite accessible.

[@bethmedina9200]

My favorite is my Solo 401K w the back door Roth. I also love my Roth IRA that I opened years ago. My brokerage is my in case of emergency, break glass account. My trad IRAs are the red headed step children, but they are still a part of my overall portfolio.

[@MatthewBennettFPV]

who do you have your Solo 401k with that lets you do backdoor Roth?

[@De-Centralized]

Two brokerage accounts (one for even years and one for odd years for long-term CGs reasons), fully funding Roth IRA, and a Traditional IRA funded by rolling from 401(k)'s from exemployers to avoid those fees. All invested in 3 stocks.

[@Kunyazaforever]

Was curious the reason behind brokerage account for even years and separate one for odd years?

[@heathmcconnell3901]

I think, for me, my favorite account is a Roth IRA for the following reasons: (1) assuming no withdrawals of earnings are made until after age 59.5, said earnings completely escape tax, (2) there are no RMD's during the account owner's lifetime, (3) pre-age 59.5 withdrawals of cumulative contributions can be made penalty-free and tax-free, and (4) pre-age 59.5 withdrawals can also be made penalty-free and tax-free if done after the 5-year post-conversion clock has run out.

[@gizmobowen]

I love my high yeild savings account with my existing credit union. Just moved the money from my regular savings account over to get a much higher interest rate at the same institution. Only drawback is the minimum account balance, but as long as I don't get below that I get a decent rate at my existing provider.

[@hanwagu9967]

there's no need to stash cash in a HYSA that requires a minimum balance, since there are so many competing HYSA that do not have minimum balance requirements.

[@jimknarr]

Consider using an ETF like VTI rather than a mutual fund like VTSAX. It gives you more flexibility and freedom to change rather than waiting until EOD to buy/sell. Mutual funds is the old way of investing.

[@austinpowe4322]

I really like my kids 529 accounts. Tax free growth and if the money isn't used for education because of scholarships or whatever the kids can roll those into roths. Erin doesn't look like you have kids from the house background but I would like your opinion.

[@ErinTalksMoney]

I love a 529, and I have a baby 😊

[@davidblack6413]

Here in Canada, the tax advantages in our tax-deferred (RRSP, or Registered Retirement Savings Plan) and after-tax (TFSA, or Tax-Free Savings Account) investment accounts are persuasive, and thus make a taxable brokerage account something you think twice about unless the retirement accounts are full. While there is some criticism of our RRSP here -- people chafe at having to pay tax on withdrawals, withdrawals must begin in the year you turn 71 -- there's a lot to like about tax-free compounding. That said, with my retirement accounts now full, I've begun investing in a taxable brokerage account. They require special handling, as selling from them involves tricky tax calculations. To minimize selling, I keep an ETF there. I always enjoy those stories of your childhood investing under your grandmother's influence, the making of a financial prodigy. I've something similar, in that my mother ran a small credit union attached to a labour union local in my small Ontario community from a spare room in our house when I was a child. I remember workers coming to get loans, and get other money-related business done. While years of grad school meant I got a later start in investing, as there was very little to invest, I've saved aggressively, moreso now with my mortgage paid. So the brokerage account really defines the future of my investing strategy, and I'm glad you are giving such accounts profile here. They are often neglected as investors think about their options.

[@freeroamer9146]

Some very good points made. I also use my brokerage account to purchase both long and short term bonds.