Skip to main content
No. of Recommendations: 0
A tax advantaged account allows your money to grow tax free until retirement. Those that allow pretax contributions are then taxable when you take distributions in retirement. Roth is after tax and then tax-free in retirement.

These are all great programs that encourage you to save, and they allow your money to earn returns and compound even if you are not contributing every year.

Once you have maxed those programs or if one is not available, investing in a taxable account in the long term buy and hold mode (LTBH in TMF lingo) is quite efficient. You pay taxes only when you sell and then at capital gains rates.

Picking investments that you can hold long term can be a bit tricky, but for example an S&P 500 Index Fund is a good one to start with. With practice, you can select stocks that meet requirements.

But note that a big stock market crash can force you to sell and pay taxes while in a tax advantaged account like a Roth you can sell and buy later without tax liability. So keep that idea in the back of your thoughts. Plan accordingly. You do not want to hold and let all your gains go away.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.