BehindBlueI's
Grandmaster
- Oct 3, 2012
- 26,608
- 113
Again I may be mistaken, but aren’t capital gains taxed? Did your equation take that amount into consideration?
Yes, but in broad strokes:
1) tax rates are very favorable vs wages (see my post above)
2) you don't pay taxes until you realize the gain. I don't pay any tax on the appreciation in a stock until I sell that stock, nor can I claim a loss until I sell and take that loss.
*So* even in a non-tax deferred account your money grows 'tax free' as long as you hold the investment. Once you sell, then you (potentially) owe taxes. You may owe taxes on dividends, though.