This Week's Money Talking Points
1. How can you use a taxable investing account?
Let’s talk taxable investing accounts. I know, the name sounds a little intimidating. But here’s the deal: a taxable investing account is really just a souped-up savings account. Think of it like a bank account on steroids that lets you buy into the stock market. It doesn’t come with special tax breaks like Roth or traditional retirement accounts, but it does give you total flexibility — no contribution limits, no age restrictions for withdrawals, and no penalties.
Now, how do you actually use one? It’s simple. Open an account at a place like Fidelity or Vanguard. Start dropping in money. Seriously — that’s it. But what should you invest in? Keep it easy with a broad-based ETF like VOO (which tracks the S&P 500). Avoid mutual funds in these accounts because they can leave you with a surprise tax bill even in a down market — not fun. With ETFs and individual stocks, you only pay taxes when you sell and make a gain. And if you hold them for over a year, those gains can be taxed at 0% if you’re in a lower income bracket. Pretty awesome, right? So don’t let the name scare you — a taxable account is a great tool in your investing toolkit.
2. How do you open an IRA?
Opening an IRA (Individual Retirement Account) is way easier than people think. If the idea of navigating retirement plans sounds overwhelming, don’t worry — this is a one-step-at-a-time kind of thing. An IRA is just a retirement account for one person. You don’t need an employer to set it up, and you can do it from your couch in five minutes through a provider like Fidelity or Vanguard (personally, I’m a Fidelity fan). You don’t even need to contribute right away — the first step is just to get the account open.
Now comes the classic question: Roth or traditional? When in doubt, go Roth. With a Roth IRA, you pay taxes now so that future-you can enjoy withdrawals tax-free — no government partner waiting to take a cut of your growth. Roths are great for young earners or anyone not in a high tax bracket. But if you are a high earner, you’ll need to check the income limits to make sure you’re eligible. Still, don’t let those details stop you from starting. Just open the account. Starting that habit — even if it’s $50 or $100 a month — is a game-changer. Build the habit now, and you’ll thank yourself in 30 years.
3. What should you invest in within your 401k?
Let’s talk 401ks — specifically, what the heck to do with them once the money’s in there. Because here’s the kicker: just contributing isn’t enough. If your 401k is sitting in cash, it’s not doing anything for you. You’ve got to actually invest it. Start by checking your account. Right now. Seriously, pause reading and go check if your money’s invested — because some employers default to cash, and that’s basically locking up your savings without the benefit of growth.
So, what should you invest in? Stick with the simple, powerful stuff. Target-date funds can be a good starting point if you want a “set it and forget it” approach, but you can often do even better by choosing a broad-based mutual fund like a total market index or an S&P 500 fund. In a 401k, you don’t have to worry about capital gains taxes on mutual funds, which makes them ideal for this account type. Keep it diversified, keep it low-cost, and avoid the temptation to chase performance or time the market. Your 401k is a long-term tool, so treat it that way. Remember: consistent contributions + smart asset allocation = retirement magic.
This week's Money Buddy
Patrick Huey is a small business owner, author, and host of the History Lessons for the Modern Investor podcast. He leads Victory Independent Planning, LLC, helping families and non-profits with investment and financial strategies under the motto “live well and do good.” A former Naval Flight Officer, Patrick is a CFP® professional with degrees in History and Business, and he's active in philanthropy, sports, and the arts.
Enjoy your week and get out there and have a money talk!
