Essential InSights

Core Topics for the Everyday Investor

Account Types: Taxable or Brokerage

Account Types: Taxable or Brokerage

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.

essential insights

Other Related Topics:

Definitions: Fixed Income

Fixed Income (or debt) represents your ownership over the repayment of a debt. Usually considered bonds, they are contracts promising the repayment of loaned money.

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Definitions: Equity

The term Equity represents any ownership rights over an asset’s cash flow generation potential. As an asset class, there is no guarantee of a return

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