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Taxable vs. Tax Deferred: Why it Matters
The chart below illustrates the potential benefits of a tax-deferred investment vs. a taxable investment. For example, if an investor in the 25% federal income tax bracket purchases a tax-deferred investment with a 5% annual yield, that investor's taxable equivalent yield is 6.67%. This means the investor would need to earn at least 6.67% on a taxable investment in order to match the 5% tax-deferred annual yield.
This chart is for illustrative purposes only and is not indicative of any particular investment or performance. In addition, it does not reflect any federal income tax that may be due when an investor receives distributions from a tax-deferred investment.
Please contact my office if you'd like more information on taxable vs. tax-deferred investments.
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CA Insurance License #0B95804 - Life, Health, Variable Contracts. Securities offered through American Independent Securities Group, LLC. Member FINRA/SIPC. 1036 E Iron Eagle Dr, Suite 105, Eagle, ID 83616 (866) 485-4635. Fredriksen Financial & Insurance Services is not affiliated with American Independent Securities Group, LLC.