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Taxes
Learning Center • financial tips • cash reserves • insurance • savings accounts • growth investments • taxes • retirement • estate planning  |
While you are investing and building your assets, a good tax planner and tax adviser is very important to your financial success. Good tax planning will help you avoid taxes on your investment income every year, so your investments will grow a lot faster.
Qualified retirement plans have two big tax benefits so use them as much as your can. First, the money you contribute each year is tax deductible, so that every $100 you contribute reduces your taxable income by $100. That saves you money. If you invest $10,000 every year into your qualified retirement plan, that reduces your taxable income by $10,000 every year.
Second, the income and capital gains earned in all qualified retirement plans are also tax deferred so keep your fastest growing investments -- stocks, stock funds and real estate trusts -- in your qualified plans: IRA, 401-K, 403-B, 457, etc.
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When you are able to invest more money each year than you are allowed to contribute to your qualified retirement plan, then look at fixed and variable annuities because their earnings are tax deferred until they are withdrawn (used). That means that you can invest your surplus capital in annuities and not pay taxes on the earnings for 10, 20, 30 years or more. Interest earned on bank savings accounts is taxable every year; annuity interest earned is not.
Peterson Money Books
Book: RICH By Choice, by Erlend Peterson, CFP
A Complete Guide to Your Financial Success
money changes everything | rich by choice | challenge of wealth
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