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Non-Retirement Investments for Your Portfolio


Many people max out their 401(k) or IRA account each year and wonder what other investments they can utilize to growth wealth. These investments don’t require a special investment account as you’ll contribute post-tax dollars to these investments. However, you’ll also be able to access the investment whenever you want instead of waiting until later in life. If you’re not sure what the right asset allocation should be, consider working with a financial advisor who can help create the right investment strategy to help you reach your financial goals. 

Non-Retirement Investments

Non-retirement investments just means that you’ll be able to invest without putting your money into a tax-advantaged retirement account. You can access these investments with multiple goals in mind. For example, you can invest in a non-retirement investment in order to grow more wealth for retirement or to just maximize the growth of dollars you have to use in the near future.

These types of investments can be anything from buying the same stocks you’re holding in your 401(k) to buying real estate or investing in a business. The goal of a non-retirement investment is to grow wealth that matches your need for capital. If you know you’re wanting to make a large purchase in the next 2-3 years then your investments are going to be something with greater risk and reward potential than if you just want to save more money for retirement.

Five of the most common types of non-retirement investments are:

1. Brokerage Accounts

A brokerage account is perhaps the most obvious choice among non-retirement investment accounts. These accounts are funded with after-tax dollars and usually provide minimal tax benefits, but the advantage is the flexibility they provide. You can purchase many types of investments in a brokerage account. Common investments include stocks, bonds, exchange-traded funds (ETFs) and target-date funds.

There are many ways to open a brokerage account today. For example, there are online brokerages with low fees, and there are full-service brokerages that may have higher fees in exchange for more extensive customer service. Another way to open a brokerage account is with a robo-advisor. These services use algorithms to automate investments, meaning investors can put them on autopilot after completing the initial setup. They may also have tax benefits, such as tax-loss harvesting.

2. Education Plans

Education plans, such as the popular 529 savings plan, are not tax-deductible. However, money in the account can be invested, and investment earnings are not taxed. Money is also not taxed when withdrawn if it is used to pay for qualified education expenses, such as tuition.

If you have a child you expect to attend college in the future, this can be a great way to save for their education. However, keep in mind that if the money in a 529 plan is used for non-education expenses, it may be subject to income tax plus a 10% penalty.

3. Real Estate

non retirement investing

Real estate is not always the most passive investment, especially when it comes to your home, or homes purchased as rental properties. There are real estate investment options available even if you don’t want to be a landlord though. Two popular choices today are real estate investment trusts (REITs) and crowd-funded real estate.

REITs can be purchased directly in a brokerage account, but for crowd-funded real estate, you’ll have to go directly to the source. Fortunately, there are many real estate crowdfunding platforms today, so it’s easy to find crowdfunding opportunities even if you don’t have connections with real estate developers.

4. Government Bonds

Government bonds are a non-retirement investment on which investors can earn some interest without excessive risk. You can buy corporate bonds and bond ETFs in a mutual fund, but government bonds must be purchased directly through the federal government. Examples of government bonds include Treasury bonds and Series I savings bonds. Bonds have a specified term, and you get periodic interest payments throughout the life of the bond. At the end of the term, you get the face value of the bond back.

While Treasury bonds are sold at auction with their corresponding rate, TreasuryDirect calculates the rate for Series I savings bonds every six months. TreasuryDirect specifically mentions supplementing your retirement income as a reason to buy both Series I bonds and Treasury bonds.

5. Certificates of Deposit (CDs)

Certificates of deposit (CDs) are similar to bonds in many ways, but they are usually issued by a bank or credit union. They also have a set term and pay periodic interest, maturing after a certain number of months or years. These accounts are FDIC-insured, paying a modest rate of interest in exchange for a low level of risk.

CDs differ from bonds in some ways; for example, their yield may be higher than bonds’ yields when interest rates are high. Nevertheless, both investments tend to have low yields compared to the return on the S&P 500 and other, riskier investments.

Bottom Line

non retirement investing

The 401(k) is one of the best ways to save for retirement becasue it can provide tax advantages, and many employers offer matching contributions. However, 401(k) plans have annual contribution limits, and some employers only offer mutual funds with high fees to plan participants. Non-retirement investing options can help you save for money that you want to use sooner than retirement. From brokerage accounts to real estate, there are plenty of opportunities to help you grow your wealth and you just need to determine the right asset allocation that will help you reach your financial goals.

Tips for Retirement Investing

  • A financial advisor can guide you through major financial decisions, like determining your investing strategy or helping you find the proper asset allocation. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Deciding how to invest can be a challenge, especially when you don’t know how much your money will grow over time. SmartAsset’s investment calculator can help you estimate how much your money will grow to help you decide which type of investment is right for you.

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