I’ve talked about diversification quite often in blog posts over the years. Most of that diversification talk has centered around investing in different types of investments, such as having a mix of stocks and bonds or investing in different market sectors. However, today I want to talk about diversifying the places where you actually put your money. You’re probably well aware that there limitations on how much you can contribute to an IRA or 401(k). So, what do you do if you have extra money? Well, you could put the money in a savings account or another IRA, or you could consider a brokerage account. I know investing in the stock market can seem risky, especially in the current economic climate, but there are advantages to a brokerage account, particularly a taxable brokerage account. The account is funded by after-tax dollars and any dividends, interest, or capital gains distributions are subject to taxation. Futhermore, if you hold assets in your brokerage account for more than a year, you may find they are subject to more favorable tax rates. A brokerage account can be very appealing for those who may want to supplement their retirement savings or want to have an emergency fund to tap into in the future. If you start an account in your twenties and follow a strategy designed to meet your goals, you may find that account worth a substantial amount in two or three decades. If it’s large enough, it may allow you more flexibility regarding when you retire. A brokerage account can also allow you more flexibility when it comes to taxes in retirement. Having a brokerage account combined with a IRA and/or 401(k) can allow you to choose the most favorable tax option each year when it comes to distributions or withdrawals. A brokerage account can also continue to grow in retirement as dividends and investments increase in value. Also, with a brokerage account there are no required minimum distributions (RMDs), so you can tap into in when you want as well as take out as much as you want. Now, in wrapping this up, there are numerous options for setting up a brokerage account. You can easily set one up yourself, but if you really want to make it a part of your retirement plans, you should speak with an investing professional who will help you set a strategy and plan to reach your goals.