In This Chapter
Taking advantage of overlooked, attractive investment options
Factoring taxes into your investment decisions
Bolstering your emergency reserves
Recommended longer-term investments
In this chapter, I discuss investment options for money held outside retirement accounts, and I include some sample portfolio recommendations. (Chapter 11 reviews investments for money inside retirement accounts.) This distinction may seem somewhat odd — it's not one that's made in most financial books and articles. However, thinking of these two types of investments differently can be useful because
Investments held outside retirement accounts are subject to taxation. You have a whole range of different investment options to consider when taxes come into play.
Money held outside retirement accounts is more likely to be used sooner than funds held inside retirement accounts. Why? Because you'll generally have to pay far more in income taxes to access money inside rather than outside retirement accounts.
Funds inside retirement accounts have their own nuances. For example, when you invest through your employer's retirement plan, your investment options are usually limited to a handful of choices. And special rules govern transfer of your retirement account balances.
Suppose that you have some money sitting in a bank savings account or money market mutual fund, earning a small amount of interest, and you want to invest it more profitably. You ...