I would like to start investing in a non-retirement account. I have:

  • A 401k through my employer I'm contributing to with Vanguard
  • A 529 for my two daughters, three and five, I'm contributing to with Vanguard
  • No debt
  • A six month emergency fund
  • A couple thousand "play money" I would like to invest for at least one year

The money is just sitting there and I would like to keep up with inflation at the least. Vanguard gives me the option to add a new brokerage account for "stocks, bonds, ETFs, CDs, and non-Vanguard mutual funds."

Are ETFs a good option? If so, how would taxes work? For example, if I invest $2,000, it returns 10% in one year and I don't withdraw anything, around how much would I owe on the $2,200? If I withdraw the entire $2,200 around how much would I owe?

  • The I in IRA stands for Individual. Your employer may be agreeing to put monthly deposits into your IRA account with Vanguard instead of including these amounts in your take-home pay, but other than this, your employer has no connection with your IRA. It is you, the Individual who has an IRA account with Vanguard. Oct 27, 2014 at 1:35
  • Used the wrong term - updated.
    – Ryan
    Oct 27, 2014 at 2:13
  • For some answers to the questions in your last paragraph, read this answer posted some time ago. Oct 27, 2014 at 2:19

1 Answer 1


You pay taxes on any gains you make after selling, so if you buy and hold you won't pay taxes (and you should hold for more than a year so that it gets taxed at the long-term rate, not the short-term rate).

I like ETFs, there are some good ones Vanguard offers that are fairly broad, or you can use something like www.Betterment.com which invests in a diversified portfolio of ETFs (and includes things like automatic re-balancing and tax-loss harvesting).

  • 1
    Are there no dividends anymore? Wouldn't those be taxable distributions?
    – JB King
    Oct 28, 2014 at 14:49

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.