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Taxable Investment Accounts: Unsheltered Investing
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When it comes to allowing investors to sock away money in retirement accounts, the IRS' generosity only extends so far. In fact, the IRS allows you to set aside no more than $ of your salary in a 401(k) annually and $ in an IRA, for . (Certain catch-up limits, if you are eligible, let you save more.)
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If you find yourself in the position of having maxed out all of the available tax-sheltered retirement vehicles, saving additional assets in a taxable account (such as a brokerage account) might be a good next step.
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Taxable accounts give you access to a range of different investments, including mutual funds, stocks, ETFs and money-market accounts.
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Some experts will recommend that if you invest in a mix of stocks and bonds, you're better off keeping as much of your stock investments as possible in your tax-deferred accounts and hold municipal bonds (tax-free bonds) in your taxable accounts. This is especially important if you have more than 15 years to invest (in other words, if you're younger than 70).
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And there's a taxable account that everyone should have: an emergency fund. You never know when life is going to throw you a curveball. So, at the same time you're tucking money away in your retirement plan, you should be saving three to six months' worth of expenses in a money-market fund.
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