The “Typical” Account
Annual Contribution Max: None
Why we like Taxable or Brokerage:
- Can hold any marketed securities and assets
- Easy to set up and administer
- Benefits are universal and hold no limits on assets
- Can be used to house capital gain indefinitely (great for legacy planning or gifting)
- Can add leverage through margin or asset based loans
- Can seek correlated and alternative assets
- Great place to save additional income
Why we don’t like Taxable or Brokerage:
- Exposes the investor to some potential tax liabilities
- Can expose investors to undue and uncompensated risk
- Requires the ability to value assets effectively
A brokerage is a baseline account and allows an investor to buy and sell a variety of investments, such as stocks, bonds, mutual funds, and ETFs. Funds can pass into and out of a brokerage account with little to no tax ramifications depending on how they’re invested, but all activity is tracked and will be reported for tax purposes on a yearly basis. Whether you find yourself setting aside money, saving for a goal, or building an income stream, you can view this type of an account like a versatile bank account.
Your InSight-full® financial plan will most certainly have at least one of these accounts, they are incredibly common.