What is a tax-advantaged investment?

Tax-advantaged is a general term that can describe an individual investment, investment plan or investment account. In simple terms, it means any type of investment or investment product that allows investors to enjoy preferential tax treatment. This can include investments that are: So why does tax status for investments matter? It’s simple.

Should I use tax-advantaged savings accounts for my investments?

Using tax-advantaged savings accounts for your investments can help you do just that. Taxable savings or investment accounts—like traditional savings accounts, money markets, CD's, brokerage accounts—require you to pay taxes in the year you receive earnings. Tax-advantaged accounts are different .

What are tax-advantaged accounts?

Tax-advantaged accounts come in two forms: Pre-tax (or tax-deferred) investment accounts. tax-deferred accounts defer your tax payments on contributed amounts until a later date. This is usually many years into the future; delaying any taxes due on investment gains until funds are eventually withdrawn. After-tax investment accounts.