Anyone who wants to consider themselves a true renaissance person needs to be knowledgeable in various domains that will impact their day-to-day life. Among these domains is the world of personal finance. While I do record some of my learnings on this blog, I am certainly not an expert. As such, as I continue to read a personal finance book each quarter and listen to podcasts here and there I gain new knowledge and tighten up my strategy. 

One strategy-tightening moment came during this summer when my fiancé and I were listening to the bigger pockets money show podcast as we did our Sunday meal prepping for the week. The guest of this particular episode was discussing his long range strategy, and making sure his investments were in tax-efficient accounts; he kept mentioning multiple account types. 

I’m fortunate that my employer offers a 401(k) (I chose the Roth 401(k) option) – I thought this was the only tax-efficient account I had access to since I don’t own real-estate or a small business. After listening to this episode, however, I was suspicious that I was missing something….

I broke out two of my handy reference books, The Simple Path To Wealth and Personal Finance For Dummies, and sure enough it was clearly outlined in both of these books – that investors have the option to open individual retirement accounts (IRAs) that will grow tax free (more can be found on the three types of IRAs in these books: Deductible IRA, Non-Deductible IRA, and Roth IRA). 

I was happy to have discovered this when I did, but also kicked myself for missing out on a solid 5 years of investing that could have gone into one of these tax-efficient accounts. Luckily, getting a Roth IRA set up through vanguard was easy-peasy and I can now contribute up to $6K per year into that account which, as mentioned, will grow tax free. 

If you have a sufficient savings rate, and enough cash on hand after your employer 401(k), then this may be a good option for you to look into. This is my personal experience, not advice, so as always I recommend doing your own independent research before making any financial decisions (both of the above resources are great to learn more if you want to get started).