You can save even more in a brokerage account by investing in tax-exempt bond funds. These mutual funds typically invest in bonds issued by state and local governments to finance projects such as highways, schools, hospitals and airports.
- Dividends paid by these funds are exempt from regular federal income taxes.
- State-specific tax-exempt funds can offer both federal and state tax advantages.
- The higher your tax bracket, the more benefit there is to investing in tax-exempt bond funds.
For more information on investing in mutual funds, click here. For information on American Funds tax-exempt bond funds, click here. Your financial professional can help you select from these or other tax-exempt funds that may be right for you.
A variable annuity is an investment that includes an option that can help make sure you don’t outlive your assets.
- Taxes aren’t due until earnings are withdrawn. (Note that you may have to pay a 10% federal penalty tax on earnings withdrawn before age 59½. Surrender charges and other costs may apply.)
- Your money is invested in professionally managed funds that are similar to mutual funds.
- Returns fluctuate as the prices of the stocks and bonds in the funds rise and fall, so the returns are variable.
- They typically include a death benefit that can provide some protection to your beneficiaries.
For information on the American Funds Insurance Series® suite of variable annuities, click here. Your financial professional can help you select from these or other variable annuity products that may be right for you.
Education savings programs
If you’d like to put money away for college tuition or other education expenses and receive certain tax benefits, consider these three options: