The Power of Tax-Deferred Investing
Tax deferral can help grow portfolio value over the long term.
The Rule of 72
How long could it take for your investment to double? (measured in years)
Source: Legg Mason. For illustrative purposes only. This table serves as a demonstration of how the Rules of 72, 92 and 114 concepts work from a mathematical standpoint. Results are rounded. It is not intended to represent an investment. The chart uses constant rates of return, unlike actual investments which will fluctuate in value, and is not guaranteed. It does not include fees, taxes or portfolio expenses, which would lower performance. It assumes no distributions are made during these periods. However, lower maximum tax rates on capital gains and dividends would make the investment return for the taxable investment more favorable. Changes in tax rates and tax treatment of investment earnings may impact the comparative results. Actual returns will vary. Withdrawals of earnings from a tax-deferred account may be subject to ordinary income tax, and early withdrawals can be subject to an additional 10% federal tax and/or surrender charges. If an investor would withdraw their entire account balance at the point of time in which the portfolio value doubled, the redemption amount would be significantly lower. Taxes are assessed annually on taxable accounts. Investors should consider their own personal goals, time horizon and tax bracket when making investment decisions. Past performance does not guarantee future results.
1 On January 1, 2018, the income threshold for the highest tax bracket (37%) was raised to $600,000 (joint filers) and $500,000 (single filers). Source: IRS.
Investment Products & Strategies
Your financial advisor can help you develop a long-term investment plan with a balance of strategies that addresses your need for portfolio growth, income, capital preservation and risk management.
All investments involve risk, including possible loss of principal. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges.
Equity investments generally provide an opportunity for more capital appreciation than fixed income investments, but they are subject to greater market fluctuations.
Diversification does not assure a profit or protect against market loss.
Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.