In this video we are talking dividend stocks, but more specifically we are talking about what type of investment account is best to hold your dividend stocks, including REIT’s, BDC’s and MLP’s.
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Dividend stocks can be an attractive and reliable source of income for investors. The question is, should you hold these types of stocks in a taxable or retirement account? The answer largely depends on your financial goals and overall investment strategy.
Holding dividend stocks in a taxable account means that any dividends earned will be subject to taxes. The current tax rate for qualified dividends is 15% for most taxpayers. For high-income earners, the tax rate may be as high as 23.8%. Additionally, any growth in the value of the stock will also be taxed when sold.
On the other hand, holding dividend stocks in a retirement account, such as a traditional or Roth IRA, can provide tax advantages. In a traditional IRA, contributions are tax-deductible, and taxes are deferred on any gains or dividends earned until the funds are withdrawn in retirement. In a Roth IRA, contributions are made with after-tax dollars, but there are no taxes on any growth or dividends earned, and qualified withdrawals are tax-free.
So, which option is best for you? If you are looking to generate income from your investments and are in a lower tax bracket, holding dividend stocks in a taxable account may make sense. You can take advantage of the favorable tax rate on qualified dividends and potentially reduce your overall tax bill.
However, if you are in a higher tax bracket and do not need the income from your dividend stocks immediately, holding them in a retirement account may be a better option. You can take advantage of the tax-deferred or tax-free growth, which can ultimately lead to a larger retirement nest egg.
It’s important to note that holding dividend stocks in a retirement account can also provide diversification benefits. You can allocate a portion of your retirement portfolio to dividend-paying stocks, which may provide a reliable and steady stream of income in retirement.
In conclusion, whether you should hold dividend stocks in a taxable or retirement account largely depends on your individual financial goals and circumstances. Consider your current tax bracket, your investment strategy, and your retirement goals when making this decision. A financial advisor can help guide you through this process and determine the best approach for your unique situation.
Joe, a ? for you. You said dividend stock should be put into the tax deferred accounts. What about the tax free accounts like the Roth accounts. If I buy stock with the money in my Roth won't the dividends also be tax free since they are bought inside the Roth…?? confused in CA. Please advise…
Hey Joe, what about covered call etfs? I have one in both types of accounts but wanted to get your feedback please.
Joe your channel is incredibly on point. Literally every question I came up with – I googled and your videos came up over and over for every single one.
Great stuff I have a question should the covered call ETF JEPI be held in taxable or IRA account
Great info. Thanks
I like holding in a taxable account. Because I don't know what the future holds. I may need to sell my portfolio in an emergency and I don't want to take the huge hit I would for violation of a IRA account.
If I invest in a dividends stock in my brokerages and reinvest my gains, would I pay taxes now or when I sell?
I subscribed! Hi Joe do covered call ETFs get taxed in a Roth IRA if it’s a qualified withdrawal? I want to create a compounding machine to live off of tax free when I retire. I am interested in Qyld Ryld and Xyld
I subscribed!!
With MLPs, or anything else that reduces cost basis, and distributions that exceed basis will be taxed.
Thank you for making this video. I think the answer I’ve come to is that I want to invest both in a taxable account and my Roth IRA, but with different types of dividend-generating products in each.
I now know more about which direction to go with my research on these topics.
I love investing in REITs and BDCs as they can provide monthly income whereas stocks do not. I tried the MLP route only to determine that the form K-1 is a major headache.
Great information in a brief and clear presentation.
This video was excellent thank you!!
Supposing Iwant to leave my Roth funds, or etfs, or BDCs to my spouse. basically I will not need the monies in my roth investments. BUt, should need the funds I can take them out. right?
I am 82 yrs old.
Question –
Roth is Maxed out. No other venues to invest except for my Taxable account.
Is SCHD doable in my taxable account? Long term hold?
If not, any ETF' suggestions or stock picks for a taxable account:??
Thanks Joe this is a great topic . I max my roth and add thereafter my taxable account
this is probably a dumb question but i recently opened a ROTH IRA. its been a week since i "transfered the money" but my bank still shows no sign of money being taken out. is this normal? Fidelity says 2-3 business days to process wire transfers
I subscribed!! Just want to clarify, If I'm getting less than 80k/year (married) of qualified dividends is there an advantage to have it in roth over taxable account assuming I'm buying to hold forever? Thanks for a great video!
Great video, what about bonds? Specifically FDHY, I have a Roth.
How much is your total account if u dont mind me asking?
dividends can be a great way to reduce volatility, which matters more in a brokerage account vs a long term retirement account
If your income is below a certain amount you don’t pay taxes on dividend income at a certain amount. You can retire at 40 and live off your dividends tax free up until the cap.
Could you do a video on the accessibility of funds contributed to a Roth IRA vs those contributed to a traditional IRA and then converted to a Roth IRA?
Note that Joe Biden has expressed keen interest in eliminating stepped-up basis on all assets (including homes).
I have a question: I know that I "can" do this, but is it something I should do, So my Roth IRA is maxed for this year. I have a decent sized position in my taxable account. On Jan 1, 2022 should I withdraw $6,000 from my taxable account and immediately invest it into my Roth IRA for 2022? I personally like the strategy of lump depositing so that the full $6,000 has the full 12 months to compound. But, I'm not really sure if I should save and hold the money in a regular bank account, or save it in a taxable account for the rest of the year while getting some gains.
I subscribed
Can you please do a video on which types of accounts can I invest for my children and grandkids that are under 18 years of age? Thanks
I’m putting dividend and growth stocks in both. This way, I can do the FIRE. The tax shelters are my hedges against inflation.
My FIRE target is 50% above expenses, so I can pay Uncle Sam and reinvest a portion for inflation hedging and unexpected expenses.
I think you’re an above average investor.
I have subscribed,
An inference and guidance on this will be much appreciated.
After watching the videos 5QualDivStocks Vs DivETF Vs S&P 500 index is it safe to assume for a beginner investor like my self just starting his journey to FI,
Should my investment funds in percentages to achieve my goal of money working for me helping me to achieve FI, from 100% funds, is it safe to invest 50% in 5QualDivStocks, 30% in DivETF, 20% in S&P 500 index funds. Thankfully.