In part 3 of the investing basics series we will discuss the last major type of investing account, the taxable brokerage account. In the previous articles, we discussed the 401(k) and the IRA accounts, these are government sponsored accounts that use tax incentives to try and get Americans to invest. On the other hand, a taxable brokerage account is as simple as the name implies, it is taxable.
Why the account you invest in is just as important as the investments you place in them.
There are three main investment account choices that we in the United States can use to buy and sell securities. It is important to understand the differences before you begin investing. Or if you have already started investing, it is important to educate yourself on the pros and cons of each account type so you can make changes if necessary. These main account types are IRA’s, 401(K)s, and taxable brokerage accounts.