From the course: Start Young for Your Best Retirement
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Setting up tax-advantaged accounts
From the course: Start Young for Your Best Retirement
Setting up tax-advantaged accounts
- It's hard to avoid paying taxes. And it's usually not legal. But there are ways to minimize your tax. Look for accounts where pretax money can be deposited. The most well-known tax-advantaged accounts are retirement accounts. Tax-advantaged accounts, like 401(k) in the US, or superannuation in Australia, allow you to contribute money from your gross salary on a regular basis. There's two advantages to this. You get to keep more of your money and the wages that you're taxed on are lower, so you're paying less tax. Talk to your employer to see what tax-advantaged retirement accounts they offer and sign up. And if the answer is none, or you work for yourself, talk to an investment advisor about tax-deferred retirement accounts. In the US, there are two broad options, a Roth IRA, where your put your post-tax money in, but all of the gains you make over your lifetime are tax-free, or a Traditional IRA where you get a tax break on your deposits, but you get taxed on the gains when you…
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