Today’s an exciting day for Magical Penny as it’s the launch of the very first Magical Penny Video!
Pre Tax and Post Tax Investing -Which is better?
In the video I outline the pros and cons of saving using Pre-tax and Post-tax money.
Pre-tax savings means saving in a pension or 401k and involves your money being fed directly from your employer into a savings vehicle without paying any income tax -you pay tax only when you come to take it out once you retire according to tax tools such as a tax estimator.
Post-tax savings means saving with your money that you ‘bring home’ -the money you find in your paycheck. If you then invest that in a savings vehicle like an ISA (or a Roth IRA if you’re in the US) then you get to keep all the gains and don’t have to pay any more tax.
…you’ll have to watch the video for the details but suffice to say it’s a typical personal finance blogger answer I’m afraid: You need to do a bit of both!
From my perspective the video was a fun experiment but what do you think? Do you think I should do more videos or stick to writing? I’d love to hear from you -both on your perspective on pre and post-tax saving, and on what you think of the video format!
Yes I know I look a bit squashed in the video -the mp4 conversion to a format compatible with Windows Movie-Maker was not pretty (currently my only editing tool) -but for my first ever attempt at making a video I’m pretty proud of the result.
Have a great weekend all -I certainly intend to as I celebrate my 24th birthday