Other Tax Advantaged Options

Chapter 7 Summary:

Many people just automatically invest all they can into an IRA or 401(k) plan and count on that for providing for all their retirement needs, without realizing the significant shortfalls and limitations of such tax-deferral plans. The largest problem with tax-deferred plans is the looming tax bomb at withdrawal time. Investors must seek other options in order to diversify the tax liabilities for their retirement funds. Plus, investors should seek investments other than those typically available in their tax-deferred plans. This diversification of tax liability and investment types will help ensure a successful financial future retirement.

This chapter revealed some of the most common alternatives to tax-deferred plans. These alternatives have significant tax advantages for current growth, improved tax treatment for withdrawals during retirement, and far better tax treatment if inherited by the next generation. Many advisors at the big financial firms are not trained to reveal these options. I believe this is because they are more complicated and they generate less management fees for the firms.

In addition, investors should consider abandoning traditional buy-and-hold strategies and place some of their money in tactical strategies. These are strategies that use modern computer traded algorithms attempting to hyper-outperform the stock market averages.  

Many other options are available including, oil and gas drilling programs, private equity, and low income house programs. The purpose of this book is not to list all the options or describe them in great detail. The purpose is to show how the biases of the big financial firms keep these options from being presented to the client. Armed with this information, you can make educated decisions about your investments.