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A brokerage account is a “non-retirement” account with no contribution limits, no income limits, and no penalty for taking money out before age 59 and a half. It can go by many names: individual account, joint account, gap account, bridge account, non-retirement account, cash account, business account, or margin account, to name a few. It will never be the advice from a Whitaker-Myers Wealth Managers SmartVestor Pro to borrow money from a bank to invest, so please be very careful about opening or using a margin account.


What Can a Brokerage Account Be Used For?

A brokerage account can be used for anything. Want to save for a vehicle over the next five years and allow that money to work for you? Dollar-cost average your money into a brokerage account and invest it as conservatively or as risky as you would like! Want to put your emergency fund to better use? Move it over into a brokerage account, and one of our SmartVestor Pros will invest it into the Schwab Money Market, which is currently yielding about 5.26% as of 11/13/2023. Want to save for a down payment on a house? Talk to your local SmartVestor Pro to go over your options.


What Are the Tax Implications of Using a Brokerage Account?

Brokerage accounts do not have the tax benefits your traditional 401(K) or a Roth IRA has. When it comes to a brokerage account, you have short-term capital gains/losses and long-term capital gains/losses.


A short-term capital gain is when you sell the position within one year of holding it, and there is a gain. A short-term capital gain is taxed at your ordinary income tax rate. Here are the 2023 ordinary income rates:

A long-term capital gain is when you sell the position after holding it longer than one year, and there is a gain. Here are the long-term capital gains tax brackets for 2023:

If you have any tax questions, please get in touch with our Tax ELP, Kage Rush.


When Should I Open a Brokerage Account?

  • When you’ve maxed out your employer-sponsored retirement account(s) and your Roth IRA(s)

  • When you are looking to invest more than 15% of your income (Baby Steps)

  • When you want to retire early and avoid early withdrawal penalties

  • When you have a long-term savings goal and want to make your money work for you

This would be using it for a sinking fund to save for things such as:

  • Down payment for a house

  • A new (to you) car

  • Home repairs

  • Wedding

  • Vacations

What Is the Difference Between Retirement Accounts and Brokerage Accounts?

Source: Ramsey Solutions


Want To Open a Brokerage Account?

Talk to your local SmartVestor Pro. Our team of advisors is happy to walk through any questions you may have and help guide you through your investing process.

What Is A Brokerage Account?

November 16, 2023

Stephen Armstrong

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm.  The information presented is for educational purposes only and intended for a broad audience.  The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed.  Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. 

Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed. 

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