What is Tax Free Investing?

Investing Tax Free and Investing Tax Deferred

The good news:
There is no better way to make your fund grow, dollar for dollar, than to let it grow in a tax-free or tax deferred fund. The assist from a lack of taxes that all of your other investments will suffer clearly makes these grow the fastest!

The bad news:

Tax deferral can only be applied towards certain retirement (IRA, 401k, etc.) and School savings (529, etc.) funds. Ask your financial advisor which tax-deferred plans are right for you. Also, there are penalties to withdrawing money from a tax-deferred account before it matures. (Age 59 ½ for retirement funds)

Tax free accounts, which are only bonds and bond funds, grow at a smaller rate, are hard to get, and you might even find yourself paying a capital gains tax on them in certain situations!

Onward to What are the Other Types of Investing Vehicles?