In this episode, Henry goes over the steps to take in order to start investing. We all know that investing is the way to build wealth but are you doing it in a tax-efficient manner? Henry goes over why it is important to think first about taxes before just blindly opening up a trading account.
Using the tax-advantaged vehicles like the 401(k) and the Roth IRA is the first place individuals should go when they are ready to start investing. It is only after having completely hit the upper limits on those two areas should a person consider individual taxable investment vehicles.
In addition to tax-advantaged vehicles, Henry also goes over why the Roth IRA has a distinct advantage over the 401k even when 401k's offer a Roth component. The ability to pair stocks into your nest egg is critical for long-term growth. 401(k)'s, inherently, do not have the ability to allow for individual stock purchases and in today's COVID-19 pandemic, we are seeing individuals stocks vastly outperform mutual funds which is what is most common in 401(k) plans.
For further analysis and deep dive into the broader numbers of mutual funds versus the stocks outlined, please check out the blog post at www.disruptivemoneymanagement.com.
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