Albuquerque Business Daily

What are the different reasons to open a general investing and/or a retirement investing account?

On Vanguard it has a "General Investing" account and a "Retirement Investment" account. Obviously the latter is for IRAs, but what is the advantages and purpose of the general investing?

Public Comments

1. The main reasons are tax considerations. In a retirement account, depending on how you set up the account, either the contributions can be tax deductible (traditional IRA) or the withdrawals are tax free (Roth IRA). In a general investment account, depending on how long you hold on to the account, the earnings are either taxed as ordinary income (short-term) or taxed at the lower capital gains tax rate (long-term).
2. If you have money eleigible to be protected under an IRA, you need to be there. General Investing designates that it's non-retirement, non-tax protected. The advantages, beyond saving money, in the GI account, are whatever features that allow you to maximize your return while minimizing your risk.