Personal Finance For Dummies, 9th Edition

Chapter 12

Investing in Taxable Accounts

IN THIS CHAPTER

Taking advantage of overlooked, attractive investment options

Factoring taxes into your investment decisions

Bolstering your emergency reserves

Looking at 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 investment accounts 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. (And you may be subject to penalties ...