Practical Investing: Why I Pay Taxes Now

Conventional wisdom says it's better to pay tax later, but I prefer investing in taxable accounts.

As advisers start offering year-end tax-planning suggestions, it seems to be an appropriate time to discuss the relative merits of taxable and tax-deferred accounts. I have both, but I prefer investing in taxable accounts—in defiance of conventional wisdom that says I shouldn’t. When advisers urge me to put my highest-yielding assets in tax-deferred accounts, I cringe. I’d just as soon pay the tax now.

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Kathy Kristof
Contributing Editor, Kiplinger's Personal Finance
Kristof, editor of SideHusl.com, is an award-winning financial journalist, who writes regularly for Kiplinger's Personal Finance and CBS MoneyWatch. She's the author of Investing 101, Taming the Tuition Tiger and Kathy Kristof's Complete Book of Dollars and Sense. But perhaps her biggest claim to fame is that she was once a Jeopardy question: Kathy Kristof replaced what famous personal finance columnist, who died in 1991? Answer: Sylvia Porter.