Saving for retirement is important and there are many ways to invest your money. And 2 popular ways are with a taxable brokerage account or Roth IRA. Both investment accounts will help you save money, but one of these accounts has a huge advantage over the other.
00:00 – Start
00:29 – Retirement
00:57 – What Is a Roth IRA account
3:00- Taxable Brokerage Account
4:01 – Brokerage Tax Implications
4:29 – Which Should You Contribute To First?
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43 comments
Im catching up to your subs! haha! love this channel!
Great advice, there are alot of new people into investing nowadays, so this will really help the newbies alot.
Save for retirement at some point? But Dustin I NEED to blow my money at Gucci NOW!!!
I've set up an account with Chase with the You Invest tool, but I don't really know where to start with investing into a Roth IRA. Any good ideas where to start? Should I just call Chase and set up an appointment with them?
Great information as usual. Would you consider doing a video (if you haven’t already) on a traditional IRA, its tax deductions (how it works and its limits), and its flexibility (can I make trades within the IRA and not pay taxes, etc.)?
I agree on maxing out the 401K company match and IRA first. HSA or regular brokerage accounts can wait, minus some extreme financial need.
Roth IRA for the win! The way I like to think about it is, I don't need to worry as much about saving money in my late 40s because if I keep maxing out my roth IRA, I will be a millionaire when I hit 60!
Noooooo! lol Don't tie up your capital with an retirement account!! That would be committing to a lifetime of wage slavery.
I max out HSA, 401k, and Roth IRA. Then have a very small amount I contribute to a Brokerage account. Tax advantage accounts are the best!
I always enjoy educational content I wish I heard 10 years ago that others need to know. I’m trying to max out my Roth before summer, contributing to an employee matched 401k, and I put a small amount into a brokerage account each paycheck.
alternative option have a charitable account and sell all ur stocks in it so u pay zero capitol gains and only have to donate 5 percent minimum of the proceeds in ur foundation to any charity of ur choice and do what u please with the rest of it
One extra less talked about advantage of the Roth IRA is that actually since it is after tax income deposited, you can withdraw the original investment you put in with no penalty… So say you deposited $2500, and that $2500 grew to $5000 over time, you can actually take out the original $2500 at any time without being taxed or penalized… Meanwhile the additional $2500 you gained from growth can remain in the Roth and continue to grow tax free… This is one advantage of the Roth IRA over a 401k and Traditional IRA… Your original contributions can also act as kindof an emergency fund if you really needed it. Of course its better to keep the money in the account so it will continue to grow tax free, but if you were in a real pinch, for example if you decided to go back to school or were in between jobs and needed money, you could draw from it up to the original amount you deposited… There is a tax form you need to fill out however if you do this withdrawal however when do your taxes to show that its not a taxable withdrawal, so its not without a bit of hoops…
The other advantage of the IRA over a 401k is that you can pick your own stocks or ETFs, whereas alot of 401ks you are limited to choosing one of the funds that are offered in the 401k… For this reason I usually roll over my 401ks into a traditional IRA if I change jobs, I prefer having the freedom to choose my investments.
I totally think a Roth IRA is the best…no one likes to pay taxes!!! Thanks about the new update about $6K and income limits
"I'd probably avoid Robinhood." 😉
1. Max out emergency fund in high interest savings
2. Max out Roth IRA contributions
3. Leftover goes into brokerage
Unfortunately I make too much for a Roth IRA though my job does have a Roth 401k.
Your the man!!
You are looking very samurai today! Solid info!
Great video, sir. Thanks for consistent content and diversifying a little. 🙂 (Side note – as of 115 likes, and my comment; no dislikes!! 😀 )
You are definitely heading in the right direction, this was already the best credit card rewards Chanel by far but there's a lot more material in investing topics and goes without saying much more value. Keep up the good work, congrats, excelent video
Hey Dustin. Any thoughts on what kind of account to open for saving for kids’ education?
You can withdraw penalty free from your IRA up to the amount you deposited. You only pay a fee to withdraw your gains
Great advise, Waller. A interesting choice some younger people have is to find money to contribute to a Roth IRA while living with bad debt or defer IRA contributions until eliminating debt. Appreciating the power of time in the market and compound interest, maxing out your Roth IRA contribution every year at age 25 (assuming at least S&P 500 like returns) can yield a significant amount more than if you waited say 5 years to do this when you have your loans beat down.
24. Been maxing out for 3 years now. Every year, baby!
Love the personal finance topics Dustin instead of just credit card news updates way to mix it up!
I love these finance videos just as much as the credit card ones. I got a very late start to my Roth but better late than never! Take care Dustin and keep the family safe!
"Brokerage account" is just a term for an account where a firm holds securities for you. You can have a Brokerage Account that is an IRA, Roth IRA, or Non-Qualified (taxable) account. You can have a professionally managed brokerage account, or a self-directed brokerage account. Probably the more correct title would be "Roth IRA or Taxable Account?" My 2 cents. Totally with you on the conclusion, though.
Let's say you do a traditional ira not roth. But when you decide to withdraw at retirement you're unemployed for like the last 2 years. So how would that be taxed?
Why don't people typically mention Vanguard Brokerages when listed examples of Brokerage Accounts?
Very strange to me.
I've been cracking my head trying to decide between a brokerage or Roth. my income is relatively low so I would be in a lower tax bracket as it is. the way I see and anybody can correct if I'm wrong but i would pay tax upfront on the money I invest whether it's into a Roth or brokerage. All my gains will be tax free on a Roth but I have to wait till retirement which is a good 30years away. Now with a brokerage account because I'm already in a low tax bracket as long as I don't sell early and I stay under (income + gains) or within my tax bracket. I should pay minimum tax but I have the money available to me whenever I need it without incurring a penalty for withdrawing early like a Roth.
Does the $6,000 individual contribution limit on IRA's apply to both single and joint filers (i.e. if I'm married, can I contribute $12k total)?
What happens if you invest about $6,000 into a regular Fidelity brokerage account first? Is it too late to simply transfer this money into a Fidelity Roth a couple of days after, without being taxed or penalized?
I have Merrill and US Bank self-directed investing accounts (so I can get approved later for their credit cards ). I want to invest in the S&P 500 and also to set up a Roth and SEP IRA. I’m a reasonably intelligent person but I cannot figure out how to do anything on either website! lol. My $ is just sitting there. I click on things and read about s**t and forget what I read , then close the website, only to try it all again the next week. Groundhog Day . 😂🤦🏻♀️
So should I contribute to my HSA before my IRA / brokerage account?
Do a video on HSA vs Roth IRA vs Brokerage Account
Can’t have a Roth. 😞
Thanks for the video! I have a question. I know there's a max amount you can put into your ROTH IRA a year, 6k for me. So if I do trades inside my ROTH IRA let's say for example I buy 1k of a stock and then it goes up and I sell it for 2k (making me a 1k return) does that extra 1k now count towards the amount I've put into my ROTH? like now I can only put 4k more in? (6k total – 1k from my original investment – 1k from my profit)
And then I can just reinvest those gains without any issues?
So if I set up a Roth IRA I can only contribute up to 6k a year?
im not sure how to go forward. i am a government employee with a deferred comp 457 account with just 85k in it. i will also have a traditional retirement pension. not sure if i need to do a roth conversion on the deferred compensation with the amount i have saved.
Fidelity
You can contribute $57000 each year until retirement if doing it in your business name
If my goal is to achieve FIRE and retire by 45, is it smart to solely contribute to a taxable brokerage account?
401k then roth ira then brokerage account.