a brokerage account can help you save for travel

How to Use a Brokerage Account to Live Your Best Life

Brokerage accounts are a great tool to build wealth and help you achieve short and long term goals.

You can invest extra cash and put it to work while you sleep. Brokerage accounts are a type of investment account that is taxable, but unlike with a retirement account, you’re not penalized for early withdrawals (you DO have to pay taxes on any dividends/stocks you sell though!). Brokerage accounts have a lot of flexibility and are a strategic place to grow cash with more potential for long term gains than in a savings account. Even cash in high yield savings accounts is still losing value to inflation!

And unlike retirement accounts, there is no cap to how much money you can invest. You can be a millionaire and have a brokerage account or be making very little money and have one too. There is also no limit on when and how much you can withdraw. You can literally clean out your entire account in one day if you want.

But you will have to pay taxes on this money once you cash it out. Oh yes, Uncle Sam always get his cut!

Every time you sell stock (called a trade) it is reported to the IRS and it will come up when you do your taxes. How much tax you pay depends on your tax bracket. But don’t let this scare you away from investing. Taxes are never going to go away and the more you can plan for them, the better off you will be. Make sure to check with your tax person if you have questions. I recommend Googling income tax brackets as the change pretty much every year (tax brackets affect how much of your income is taxed).

The great thing about brokerage accounts is that you have control over your money since it’s not tied to retirement. You can make withdrawals when the time is right for you. You can use it as a tool to save towards a large future purchase or a short term expense.

An example of mine is when I sold $3,000 of my Tesla stock! I GLADLY used that money to hire a my Latina  business coach. I had some cash set aside in my emergency fund but didn’t want to dip into it, so I sold some stock instead. The process was easy. I logged into my account while on the beach in Playa del Carmen. I clicked a few items and done. It took about two days for the cash to settle and then I had the money deposited into my checking account.

Hiring a business coach was a game changer for me! I made back over double my 3k investment within a month! I reaped the rewards of investing both in the stock market and in myself.

Investing in a brokerage account can help you achieve shorter term goals outside of retirement. I think people automatically associate investing with retirement, but I want to break that myth. Yes, ultimately my goal is to have enough investments that I can retire and take care of my future 60 year old self.

BUT I can also use some of that brokerage money today. Is there something that would bring you more joy? Is there a big expense that would be worth taking on for your business? You have the option of cashing out from your brokerage without penalties.

I want to make sure people know that you can access your brokerage account’s money. I want you to be excited about using your money and putting it to work instead of feeling guilty about not doing enough with it. How great would it feel to know you have a stash of cash in your brokerage account growing daily and ready for your next vacation? Or whatever goal you want to accomplish? It’s very possible and easier than you may think!

I will say that before you dive into investing in a brokerage account, make sure that you have a solid emergency fund saved up. This is always the priority before investing because investing comes with risks. Some days, my brokerage account will go down by $500 and up by the same amount the next day. The more money you have, the larger the fluctuations.

Your emergency fund should have at least six to twelve months of expenses ready to go in case something happens. I also recommend having a debt payoff plan in place. There’s no point in investing if you are paying out interest fees every month and losing money there. These are all things I coach clients on in my six month program.

Book a call with me to get started on living your best life with a brokerage account!

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