Are You Losing Interest in Your Taxable Investments?

March 30, 2018

What Do Your Taxable Investments Really Earn?

When allocating your investment funds, think about the tax implications. If your money is in taxable investments, you may be losing money every year to taxes, decreasing your after-tax return. For example, if your federal tax rate is 24%, and you earn 2.50% in a taxable investment, then your after-tax earnings would be only 1.90%.

Taking Advantage of Tax-Deferred Annuities

One of the benefits of an annuity is tax deferral, because you don't pay taxes on your earnings until you withdraw your funds. Tax-deferred annuities make your money work harder for you by earning interest on your principal, interest on your interest, and interest on your tax savings. We call this triple-compounding.

Ask how you can take advantage of tax-deferred compounded growth, a minimum guaranteed return and flexible access to your money along the way with an annuity from The Standard.

Use this chart to determine what your taxable investments are really earning when you include the taxes you have to pay on your earnings each year.

If your federal tax rate is:10.00%12.00%22.00%24.00%32.00%35.00%37.00%
And your tax-deferred rate is:Then your after-tax rate would be:
1.00%.90%.88%.78%.76%.68%.65%.63%
1.50%1.35%1.32%1.17%1.14%1.02%.98%.95%
2.00%1.80%1.76%1.56%1.52%1.36%1.30%1.26%
2.50%2.25%2.20%1.95%1.90%1.70%1.63%1.58%
3.00%2.70%2.64%2.34%2.28%2.04%1.95%1.89%
3.50%3.15%3.08%2.73%2.66%2.38%2.28%2.21%
4.00%3.60%3.52%3.12%3.04%2.72%2.60%2.52%
4.50%4.05%3.96%3.51%3.42%3.06%2.93%2.84%

For Illustrative purposes only. If you have questions regarding your specific situation, please consult your tax advisor.

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