All About Investments - Taxes and Accounts
episode
DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing
29 min
4 speakers
5 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the main topic discussed in this episode?
Hey, this is Allie, and thanks for listening to the show. Give us a five-star review where you listen and share this episode with someone who might need to hear it. Now, enjoy the show.
Welcome back, ladies and gentlemen, listening to another edition of DIY Money. DIY Money. Okay, we're going to do something a little different. Every once in a while, we do a series and we revisit a topic or dive into a topic that we feel we might not cover in depth and we need to. So obviously, if you listen to the 700 some odd episodes of DIY Money, you will pick up nooks and crannies, little tidbits, etc. Tidbits are my favorite. But we often get questions and we think to ourselves, wait a second, that question, a great question, but it's kind of missing the point. It's missing something that might be rudimentary to us, but not rudimentary to you. So we are going to do a deep dive in various subject matters to go through some of the basics, some of the complexities, so that you have it in your toolkit.
And today we're starting a three-part series. On investing. Who doesn't love to talk about investing? Now, we are going to start with not the most exciting topic. Okay, that's rude. In the world.
What is the scope and purpose of this three-part investing series?
And that is the tax ramifications of investing. Come on. Give me a break. So we have A. Howard, the CPA, to talk about the various tax ramifications. implications of various investment accounts. And this is important because while Congress might change and pass different tax rates or tax laws or structure, the basic concepts have stayed the same for at minimum the last 25 years that I've been in the business. So more than likely, the concepts will stay the same. It's important to understand the concepts. So Allie,
Thank you.
Do us a favor and maybe paint some brushstrokes for us of some of the vocabulary and some of the understanding of what these different taxes are. I feel like we lump taxes. I paid a lot of taxes. But it could be a lot of different taxes, right? On any given day we pay taxes. I paid sales tax. I might pay a tax at a toll or something like that. So break us down for us the different taxes that are associated with investing.
Okay.
you got your brushes warmed up yet and you're ready, you can do this.
Yeah. Before I do that, I want to say for those listening or watching, put on your seatbelts because Logan said, okay, you have 15 minutes to explain all of the taxes on all of the investments. We have a time period here? No, it's not happening. Okay. So like you said, there's a lot of different types of tax. So most people are just like income tax, boom, done. But especially with investment accounts, it's important to know some of the nuance. So In an investment account, you can have a variety of different things that trigger tax of some sort. The first couple, I'll lump them together, is interest and dividends. So this is when you own a share of a company or you also could get like in a bank account, you have interest, that kind of thing.
They're kicking you off a little bit of income from time to time. And it's either... They're kicking off income because they've performed very well, which is a dividend, or they're kicking off interest. Maybe you own a small portion of debt, and so they're paying you to utilize your money on a very large scale.
I'm going to pause right there because I want to – I know this is, again, a little confusing, but I'll be that guy who interjects and says the same thing because people already have questions. Now, most people – most people – will not experience this interest or dividend tax because you're only investing in your 401k, your IRA, or your Roth IRA, which have this veil of taxes at least for a little while. So just hold on to that for a moment. We'll come back to that. Some of you that have been taking advantage of high-yield savings accounts, you might have just gotten in the last couple of years your very first 1099 from a bank. And you were like, what is this? Are you kidding me? And I hear this all the time.
I got to pay tax on the money that I already paid tax on, put it in a savings account, it grew a little, and now I got to pay more tax?
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:02–1:19
2
What is the scope and purpose of this three-part investing series?
1:19–11:36
3
Which types of taxes should investors understand before opening accounts?
11:36–13:43
4
How are interest and dividend income taxed across accounts?
13:43–24:11
5
What triggers capital gains tax and how do long‑term vs short‑term rates differ?
24:11–29:25