Investing is essential to long-term planning, 

whether your goals are owning a home, paying 

for education, enjoying a secure retirement, or 

fulfilling a dream worth working for. What makes 

investing effective is having a workable plan for 

adding new money regularly, monitoring and 

evaluating your progress, and modifying your 

approach as your goals evolve. 

One of the biggest challenges is the number 

of choices you have to make: which accounts 

to open, what investments to make in those 

accounts, and when to buy and sell.

CHOOSING ACCOUNTS

After you identify your goals, the time frame for 

achieving them, and the amounts you want to 

accumulate, the next step is opening the invest-

ment accounts that will best help you meet these 

objectives. Your choice includes tax-deferred,  

tax-free, and taxable accounts—and many  

investors use all three.

For example, when you’re investing for  

retirement or higher education, you can take 

advantage of tax-deferred or tax-free accounts. 

Tax deferred accounts let you postpone taxes 

on your investment earnings—and sometimes 

on amounts you invest—until you withdraw the 

money. With tax-free accounts you typically avoid 

MANY ACCOUNTS, ONE VALUE

If you’re investing for different goals using 

different accounts, keep in mind that 

certain investments may be better suited 

to one type of account than another. For 

example, municipal bonds may not be the 

best choice for a tax-deferred account. 

That’s because the interest they pay is  

usually tax free in a taxable account, but 

all withdrawals from tax-deferred accounts 

are taxable, whatever their source.

Long-Term Planning

Achieving your most important goals takes time—and a strategy to  

get there.

TYPES OF 

TAX-DEFERRED

 AND 

TAX-FREE

 ACCOUNTS

Employer 

Plans
Individual 

Plans

TSP 

and

 Roth 401(k) 

401(k) 

and

 Roth 401(k)

403(b) 

and

 Roth 403(b)

457 

and

 Roth 457

Roth IRA

IRA

529 Plans
Coverdell (ESAs)
Baccalaureate Bonds  

and US Savings Bonds

TAXABLE ACCOUNTS

+

RETIREMENT

EDUCATION

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