Tax-advantaged account
A type of investment account that gets special tax treatment to encourage long-term saving — usually for retirement. Examples: 401(k) and IRA in the US, ISA and SIPP in the UK, plan de pensiones in Spain. Either deferring taxes (pay later, on withdrawal) or removing them entirely on the gains. Should usually be filled before regular taxable accounts.
Maxing out a US Roth IRA each year ($7,000 in 2024) means decades of growth that are never taxed.
The silent subtractors
Fee
A charge taken from your investment by a fund, broker, or advisor — every year, forever.
Read →Tax
The other silent subtractor. Almost every gain you make is taxed somewhere.
Read →Expense ratio
The annual fee a fund charges, expressed as a percentage of your investment.
Read →Commission
A fee charged by a broker each time you buy or sell. Mostly $0 with modern brokers.
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