Which Investing Account is Best? (401k vs IRA vs Taxable)

What is the best investing account? A retirement account like an IRA or a simple taxable brokerage account? We are recommended retirement accounts SO often and for SO many people that they seem like the obvious choice for everyone. But the restrictions, rules, and limitations that come along with them actually make them a bad choice for some people. Speaking of bad choices...how bad is a taxable brokerage account really? It must be bad for taxes since its literally named a "taxable" brokerage. Lets do a little more digging and discover just how bad it is when we compare it to the competition!
⏱Handy Timeline:
0:00 Preview
0:10 Everyone recommends retirement accounts
0:33 Why we use retirement accounts
2:01 Personal confession
3:18 4 Reasons to avoid the simplest account
5:37 Using the money we invest
6:15 Using Roth IRA money
6:39 Using Traditional IRA money
7:06 Using 401k money
8:17 The problem with retirement accounts
9:00 The truth about taxable brokerage accounts
10:37 Example: $110k tax-free
12:30 The New Normal in Investing
13:45 2023 Long Term Capital Gains Brackets
14:17 The Strategy
14:47 The best way to get information
14:57 Which investing services I recommend
15:05 Secrets
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Disclaimer: Any financial or investing-related topics discussed on this channel are not from a professional investment advisor and are not financial advice for you. This is for entertainment and inspirational purposes only.
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[@Tonyrona]

This is eye opening, thanks brother

[@charliehargrave7458]

Taxable and Roth is the only to go, also you do not have to wait till 59 and a half to have access to your money in a taxable account.

[@user-pf7oq9bk9o]

I always thought you are immediately taxed 20% on LTCG. Really awesome video!

[@BrendanEvan]

Oh it’s SO much better than that! Glad you liked it!

[@runningaway2388]

The video starts @11:10 you are welcome

[@pongmolina2157]

Social Security can be taxable Medicare premiums ignores Standard deduction

[@jtsandig]

the benefit to retirement accounts is that they force savings since you can't take the money out whenever. but yes I think most people would benefit from taxable brokerage accounts since with the deductions, they'll likely not actually be taxed on it. so like a roth ira plus an hsa plus taxable is a real good combo

[@BrendanEvan]

The forced-savings element can definitely be helpful!

[@linetsart2568]

My two cents is that if you are going to focus on a taxable account, then, you should also focus on asset protection to keep that account secure.

[@lee-13]

What is asset protection?

[@RichardWagenknecht]

Wow, talk about timely. Approaching retirement age and my wife and I have a significant brokerage account (and lots in IRAs 401ks). I was actually thinking I’d made a big mistake having too much outside of retirement.

[@Znatnhos]

I'm a little worried about how pineapples are involved in investing... I do feel you missed an important feature of an employer's 401k, which is that it often offers some sort of matching, which is FREE MONEY! Don't pass that up, even if you have to wait to access it and for it to be fully vested. Also, my 401k plan offers the ability to take out a loan against my investment, essentially borrowing from myself at a very low interest rate. It was a great option for me to allow me to put a down payment on my house when we suddenly needed to move. But, yeah, there's a reason investors use taxable brokerage accounts... taxes are still really low for average people!

[@BrendanEvan]

Getting matched pineapple for pineapple IS pretty awesome!

[@NoWeyJose]

@@BrendanEvan Can what happened with FTX happen with Acorns?

[@BrendanEvan]

@@NoWeyJose I think any company can go under in a “sudden” turn of events that were actually hidden and years in the making. FTX was operating in a wildly unpredictable space doing what seems to be wildly foolish things so they were on borrowed time. Hopefully the platforms we use have a more solid footing from existing regulations, ethical practices and leaders with more wisdom.

[@onlygameplay7117]

thank you thank you for talking about this. I can only really afford to invest in 1 account and have no 401k. everyone says roth ira or your doing it wrong would it be bad in my case if I just went full force on taxable accounts in your honest non financial advice opinion ?:)

[@onlygameplay7117]

I just want freedom no ties but domt want to screw myself long term by not taking advantage of the tools we have. ya kmow?

[@BrendanEvan]

You’ve gotta invest the way that makes sense to you. Sometimes those critical people are quick to make comments while doing nothing themselves.

[@onlygameplay7117]

@@BrendanEvan that comment is the best advce iv gotten. nothing anywhere i search gives me answers to anything really. and its not that im looking for stuff to tell me its better. its just like.. is there any info on this topic. LOL this video is the first one that i have found that even remotely touches the topic iv been looking for. so again thank you.

[@julhe8743]

My job allow me to put 23k into my Roth retairement account with a 7% fixed interest AND $23k into my Roth 457 invested in Large, medium and small caps investment funds. Do you think that I’ll need brokerage account too? Thank you for your great videos.

[@BrendanEvan]

If you want more flexibility than those accounts allow for (in terms of being able to access the money before you retire) then maybe you'd want one, but it sounds like you're absolutely crushing it!

[@MissTopDJ007]

Would you recommend to match up to the company, maxing IRA, and the rest to tax brokerages?

[@BrendanEvan]

Depends on how you want to do taxes and how available that money needs to be. Your way makes it more available but less tax friendly. If you got the match, maxed IRA, then went back to continue on the 401k, you’d get more tax breaks. But then the money is locked behind penalties etc. What’s your priority?

[@MissTopDJ007]

Definitely making it available because there's a chance I wont make it until my retirement age like my mom. She past away in her early 50s.

[@BrendanEvan]

Ah, makes sense. A taxable brokerage is a lot more accessible. Remember that your contributions to a Roth IRA can also be withdrawn without penalty!

[@tamn2224]

Great information! But anyone out there can you tell me what to invest long term to get sure income every year so we don’t have to pay tax. I mean sure way making money not losing money every year. Thank you.

[@BrendanEvan]

There’s pretty much no such thing as guaranteed income. You could use a savings vehicle like CDs or savings accounts or venture into the fee-infested waters of annuities or reverse mortgages etc but those returns will be lower than investing. There’s no such thing as a guaranteed high return that’s risk free. If anyone promises that they are lying.

[@stevemlejnek7073]

It seems to me having money in all three (Roth, Trad and taxable brokerage) is best for flexibility in pulling income and managing taxes in retirement.

[@BrendanEvan]

That’s my plan. I don’t have some specific percentage for each one but we will have some money in each so the options will be there.

[@kona6451]

in my case, 4 accounts when you add in my HSA

[@peaceful4you408]

Taxable is by far way better. Trust me. With Taxable accounts, you can invest into riskier assets that give you way higher returns so that the tax penalty barely has an impact on your portfolio.

[@J-D248]

Good video... But I have to take issue with the use of the term "tax free". You're still paying taxes whether it's a 401k, IRA, Roth or taxable account. The difference is when you pay taxes. 401k and Traditional IRAs are pre-tax, where Roth and taxable accounts are post-tax. The difference there is that with a Roth your growth is never taxed, and in your taxable accounts your growth may be taxed. Just do a little simple math and you'll find out that there is virtually no difference in how much tax you pay when saving in any of these accounts assuming that your tax bracket is constant. You will always end up with the same amount in the end.

[@Rew123]

That's shockingly inaccurate. You realize you're going to start with 20-40% (depending on your income tax rate) less money in your brokerage account compared to a traditional retirement account, right?

[@J-D248]

@@Rew123 correct, that's exactly what I'm saying.

[@guzzi95]

I am happy with my 2 5 year, Fixed Index Annuities. And my 4- CD Ladder.. Of course I am not having to draw off of it at this time.. I got really tired of the yo yo stock market.

[@BrendanEvan]

Glad you're happy!

[@MissTopDJ007]

Could you explain more about 4 year - CD Ladder? Where to put it?

[@akin242002]

I'm going with Roth IRA. As a Californian, nothing feels better than tax free stock growth!

[@BrendanEvan]

Relative to other states, a Roth benefits you the most! Never thought of it that way before!

[@whasian2007]

Well I mean that kind of depends because with Roth you pay that tax now so in a high income taxed state like cali you may be paying a lot in taxes especially while you’re working depending on your income where if you use a traditional account like a 401k you save on state and federal income tax and then say move to a no income tax state then pull the money without paying state tax but still pay federal.

[@akin242002]

@@whasian2007 You make some valid points. However, when I'm that old taxes are the last thing I want to be concerned about. The mental freedom of tax anxiety is worth the tax hit early in life.

[@whasian2007]

@@akin242002 I think that’s totally fair, sometimes it’s worth paying a little more to have that simplicity instead of always having to optimize everything. I personally enjoy the optimization and the nitty gritty details but I know that’s not for everyone lol

[@akin242002]

@@whasian2007 I wouldn't call that optimized. More like a delayed burden.

[@ronnievengua9535]

Pineapple 🍍

[@BrendanEvan]

🍍🙌😆

[@chaitanyanandurkar9009]

With everything going on the secret word should be FTX

[@BrendanEvan]

In that case it should be “corporate malfeasance”

[@Rew123]

Lol

[@violentgreen7196]

🤎pineapple…great content thank you