Roth vs. Traditional, and Other Vital Tax Topics - E53
- Jan 28, 2024
- 41:32
- Full Episode
Three things are certain in life: death, taxes, and a couple weekly articles from The Best Interest. Today we explore the intersection of two of the most important components of personal finances, taxes and investing and why you might save thousands of dollars off your tax bill.
Jesse tackles the topic of taxes from a few different angles: the most common mistakes in understanding taxes including tax brackets, how they work and why accepting a raise can't decrease your take home pay, the RRTTLLU framework of assessing investments and taxes, the "real returns" of different tax-advantaged accounts, and a deep-dive lesson in capital gains taxes.
Mentions:
Capital Gains Taxes 101: https://bestinterest.blog/capital-gains-taxes-101/
Roth is Better Than Traditional: https://bestinterest.blog/roth-is-better-than-traditional/
How Do Taxes Affect Stock Return?: https://bestinterest.blog/how-do-taxes-affect-stock-returns/
RRTTLLU: https://bestinterest.blog/rrttllu/
15 Minutes Saving $120,000: https://bestinterest.blog/15-minutes-of-math/
How Do Tax Brackets Work?: https://bestinterest.blog/how-tax-brackets-work/
Reddit Investing Question: https://docs.google.com/spreadsheets/d/1-9EB24Y-ow0yutfVoWICM4We9p4m9b7C4JRoqKI9G_c/edit#gid=0
More of The Best Interest:
Check out the Best Interest Blog at bestinterest.blog (https://bestinterest.blog/)
Contact me at [email protected]
The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.
Brief Summary
Jesse Kramer explains the impact of taxes on investing, tax brackets, and capital gains planning.
Key points
- Understanding Tax Brackets. Many people misunderstand how tax brackets work, leading to incorrect assumptions about their tax burden.
- The Impact of Taxes on Returns. Taxes can significantly reduce your investment returns, often by as much as 41%.
- Roth vs. Traditional Accounts. Choosing between Roth and traditional accounts depends on your expectations of future tax rates.
- The Cost of Assumptions. A quick math error and faulty logic can lead to a $120,000 loss.
- Understanding Capital Gains Taxes. Capital gains taxes can be complex; knowing how they're calculated is crucial.
- The Importance of Tax Planning. Capital gains tax planning is vital, especially for assets you plan to pass on.
Episode highlights
- Understanding Tax BracketsMany people misunderstand how tax brackets work, leading to incorrect assumptions about their tax burden.“Ben is wrong about how tax brackets work.”2:58Jan 28, 2024
- The Impact of Taxes on ReturnsTaxes can significantly reduce your investment returns, often by as much as 41%.“Taxes decrease stock returns basically by 41%.”14:35Jan 28, 2024
- Roth vs. Traditional AccountsChoosing between Roth and traditional accounts depends on your expectations of future tax rates.“It all depends on tax rates current versus future.”19:23Jan 28, 2024
- The Cost of AssumptionsA quick math error and faulty logic can lead to a $120,000 loss.“How can a quick math error plus some faulty logic cost someone $120,000?”20:48Jan 28, 2024
- Understanding Capital Gains TaxesCapital gains taxes can be complex; knowing how they're calculated is crucial.“How are capital gains calculated and what accounting methods are used?”26:41Jan 28, 2024
- The Importance of Tax PlanningCapital gains tax planning is vital, especially for assets you plan to pass on.“Capital gains tax planning is especially important in retirement or in older years.”39:45Jan 28, 2024
- Understanding Capital Gains TaxesExploring the implications of capital gains taxes versus income taxes.“It's quite the loophole to allow people to die and absolve themselves of taxes.”40:30Jan 28, 2024
- Subscribe and Support the PodcastEncouragement to subscribe, rate, and review the podcast to help others find it.“We really appreciate it, we'll catch you on the next episode.”41:12Jan 28, 2024
