The Cash Flow Clock: For Retirees - Book - Page 77
The Cash Flow Clock
earn. We must also consider how much of it we will
be able to keep after taxes. This can be a challenge
with non-qualified assets, a challenge which the Cash
Flow Clock helps us to meet.
If we don’t need to use non-qualified assets for shortterm income, then we can invest in growth assets and
hold them for the long term. Real estate and
individual growth stocks are some of the best
investments for this bucket. We don’t want to
recognize taxable income if we can avoid it,
especially income that we are not currently using.
We should avoid dividend stocks in non-qualified
accounts if we can since they are taxable each year,
even if we reinvest them. Besides, they don’t give us
our best chance for growth.
Rental properties generate monthly income, but
depreciation and other tax benefits can reduce the tax
impact on a year-by-year basis.
Growth stocks pay out lower dividends (if any) and
provide the highest opportunity for growth.
No matter which investments we choose for our nonqualified accounts, if we don’t need them for income,
we can let them grow and then pass them to our
beneficiaries tax free. If our investments lose value,
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