Deferring your tax liability translates into more money staying in your investment and generating greater returns over time. Pre-tax contributions will allow you to remove the amount of the contribution from your gross income in the year the contribution was made. Therefore, your year-end taxes will be immediately reduced while the future earnings on the investment will be deferred. All accounts assume a pre-tax investment rate of 8 percent. Before placing an investment within any of the various tax-advantaged accounts, be sure you understand all of the rules and restrictions that will apply to you.
All accounts have their own rules.
Be aware that tax-deferred accounts may be more restrictive than a taxable account in the way you can receive your money or you may have penalties applied to certain withdrawals. Fundamental Investment Strategies Devising the most ingenious investment strategy ever conceived should not be your goal. Your task should be to create a basic investment plan that suits you and then stick with it. Investing regularly, automating your savings program and diversifying among various investments are some of the keys to a successful investment strategy. But with the markets daily fluctuations, most investors are unsure of when they should put their money into an investment.