Saving for the future can seem complicated and confusing if you’re not sure where to start. With so many options out there, you may not be sure where to put your money. Tax-free investments are a smart option.
As the name implies, tax-free investing allows you to save for the future without having to take a cut in your earnings because of taxes. Sounds too good to be true, right? Fortunately, it’s not. Tax-free investments may be your best move.
A Roth IRA allows investors to save for retirement without having to pay taxes on it. These investments are funded with after-tax dollars, meaning you’ve already paid taxes on what you put in. And since that’s out of the way, you don’t have to pay taxes on what you earn in that IRA.
Your money will grow tax-free until you are ready to take it out after you retire. And when you do, you can make tax-free withdrawals.
State and local governments issue municipal bonds as a way to pay for schools, hospitals, sewer systems, highways and other improvements in the area. By purchasing a municipal bond, you are essentially lending money to a state or local government entity, which will use the money to make those enhancements. With that bond, the government promises to pay you a specific amount of interest and return the principal to you on a particular date of maturity.
The investments are typically free of federal taxes because bonds issued by states, municipalities and other local entities are exempt from that type of taxation.
College Savings Plans
Saving for the future can also mean planning to pay for college. Fortunately, you can do this tax-free as well with a 529 plan. Also called a college savings plan, most states offer this type of investment, and a variety of options are typically available.
As long as you use the funds for qualifying educational purchases, the investment gains are free from federal taxation. What’s more, the money in a 529 plan is available for other expenses relating to college, including tuition, room and board and books and supplies. Some states even offer additional tax breaks or other incentives to participate.
Invest in Your Future
Choosing what to invest your money in can be a difficult decision, but when you have the right people on your side, you can make the best—and smartest—choice. Jason Graziani can help you with tax-free investments in Frisco, TX. Learn how by calling (972) 992-1920 or visit http://jasongraziani.com/ today.
Jason Graziani | Tax Free Investments Frisco TX | (972) 992-1920