When it comes to paying for goals, we assume you will withdraw funds from your most to least liquid assets. This maximizes your compounding interest while minimizing taxes, fees, and penalties.
Your most liquid asset, we assume you’ll start paying for your goal with any available income earned during the goal period.
We assume you’ll spend the cash in your checking and savings accounts -- no taxes, fees, or penalties.
3. Taxable accounts
Once cash is depleted, we assume you’ll sell your investments. We account for any taxes from capital gains. To minimize taxes, we suggest prioritizing assets held for longer than one year.
4. Retirement accounts
As a last resort, we assume you’ll withdraw from your retirement accounts. We do not advise dipping into retirement unless you’re contributing more than you’ll need. We account for the 10% penalty you may incur for early withdrawal.
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