By this step in your plan, all tax-advantaged accounts are maxed. Every additional dollar goes into a taxable brokerage account. Unlike retirement accounts, there are no contribution limits, no withdrawal penalties, and no age restrictions — making this the account that bridges you from your savings phase to financial independence.
Open a Brokerage Account
Your action card links directly to Schwab and Fidelity. Both offer $0 commissions and no account minimums. Either is a strong choice — pick the one where you already have accounts, or go with whichever interface you prefer.
Here is what to do:
- Click through from your action card to Schwab or Fidelity and start the account opening process.
- Have these ready: your Social Security number, employer name and address, and the bank account you want to use for funding.
- Choose an individual taxable brokerage account. This is not an IRA. If you want a joint account with a partner, select that option instead, but for most people an individual account is the right starting point.
- Link your bank account for ACH transfers. This lets you move money in and out electronically, usually within 1-3 business days.
Select Your Investments
Once the account is open and funded, you need to actually buy investments. Cash sitting in a brokerage account earns next to nothing. Your action card links to the Bogleheads three-fund portfolio guide, which is the standard reference for simple, diversified investing.
Three-Fund Portfolio
This approach splits your portfolio across three broad index funds that together cover the entire global stock and bond market:
- Total US Stock Market — VTI (Vanguard ETF), FSKAX (Fidelity mutual fund), or SWTSX (Schwab mutual fund)
- Total International Stock Market — VXUS (Vanguard ETF), FTIHX (Fidelity mutual fund), or SWISX (Schwab mutual fund)
- Total US Bond Market — BND (Vanguard ETF), FXNAX (Fidelity mutual fund), or SCHZ (Schwab ETF)
Tax Efficiency in Taxable Accounts
In a taxable account, how a fund is structured matters. Prefer ETFs over mutual funds here. ETFs are more tax-efficient because of how they handle redemptions — they use an in-kind creation/redemption process that avoids triggering capital gains distributions to shareholders.
Also avoid high-turnover actively managed funds. Frequent trading inside a fund generates short-term capital gains that get passed through to you as taxable distributions, even if you never sold a single share.
If you want maximum simplicity, a single fund like VTI (total US stock market) or VXUS (total international) is a reasonable starting point. You can add complexity later. The important thing is to get invested rather than leaving cash idle.
Enable Dividend Reinvestment
Turn on automatic dividend reinvestment (DRIP) so that any dividends your funds pay are used to buy additional shares automatically. This is a single setting found in your account preferences or under each holding's options. It keeps your money compounding without requiring you to manually reinvest small cash amounts throughout the year.
Tax-Loss Harvesting
When a position in your taxable account drops below what you paid for it, you can sell at a loss and use that loss to offset capital gains elsewhere in your portfolio — or up to $3,000 of ordinary income per year. Any unused losses carry forward indefinitely. This is worth doing when markets dip, but there is one important constraint: the wash-sale rule prevents you from claiming the loss if you buy a “substantially identical” security within 30 days before or after the sale. In practice, this means you can sell a total market fund at a loss and either wait 31 days to rebuy it, or immediately purchase a similar but not identical fund from a different provider.
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