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In this YouTube video, Dave breaks down the basics of tax allocation using a whiteboard. He introduces three tax buckets: pre-tax, tax-free, and taxable. Pre-tax accounts, like 401(k)s and IRAs, are funded with money that hasn't been taxed yet and will be taxed upon withdrawal.
Tax-free accounts, such as Roth IRAs, are funded with already taxed money and grow tax-free.
Taxable accounts, like Robinhood or E*TRADE, are subject to taxes on dividends and capital gains.
Dave emphasizes the importance of having a diversified tax allocation strategy and explains how to achieve tax diversification. Overall, viewers gain insight into optimizing their tax strategy for financial success.
Chapters:
0:09 - 0:47: Tax Buckets
0:48 - 1:45: Pre-tax Accounts
1:46 - 2:56: Tax-Free Accounts
2:57 - 3:48: Taxable Accounts
3:49 - 4:12: Tax Diversification
4:13 - 4:19: Conclusion
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