Tax Savings

What Is the Investment Options Available to Save Taxes?

What are the investment options available to save taxes? For someone considering retirement, an easy way to lower the bill will be to increase your take-home pay. Most people do not realize that they can actually deduct their interest and some other costs on their federal income taxes. This allows them to pay less without increasing their taxable income substantially.

Home equity loans

These are actually second mortgages on homes. The government often lends money on homes that people own and have paid off through regular mortgage payments. If you are going to refinance for debt consolidation purposes then this is a great option.


IRA’s are a type of mutual fund. A mutual fund is simply a pooled investment that is managed by an investment professional. Funds are available both with and without restrictions on how you can invest and come up with the money you need for your retirement savings.


Banks offer both checking and savings accounts. You can use the money you put in the bank to do pretty much anything you want with it. This is the least risky option but also the most expensive. Banks will typically charge the highest interest rates.

Real Estate

Real estate is a tricky asset to invest in. Some real estate values increase over time. Others go down. If you plan on living in the house for a long time then you should look into rental options or lease the property to a third party.


Bond markets are similar to mutual funds in that they both offer some investment options that have a portion set aside for interest. The difference is that bonds have a fixed interest rate while funds can fluctuate up and down. The best choice usually depends on your goals.

Cash Flows

Cash flows are another way of increasing savings. These options are not always tax-free. They can include gifts and inheritances and must be reported on your personal financial statement.


An annuity is designed to protect you from short term fluctuations in income. This type of investment can be used to save for retirement, purchase a home, purchase vehicles, and even help you make ends meet during a rough economic period.

Gains Interest

Real estate can be invested in residential (real estate owned), commercial and industrial properties, etc. Gains interest can be reinvested. If you pay attention to market trends, you can make huge profits. However, this option requires that you understand the laws, rules, and regulations regarding real estate.

Certificates of deposit

CDs are preferred by some people because of their simplicity and flexibility. You need to consider the interest rate and tenure, as well as withdrawal charges. However, if you are able to manage risks and take maximum advantage of lower rates, you can make significant profits.

Roth IRA

The traditional IRA has limited options. You cannot invest in stocks, bonds, mutual funds, etc. You also cannot take a vacation on your CD. However, a Roth IRA has several investment choices. You can invest in individual retirement accounts (IRAs) or several types of IRAs linked with stocks, bonds, mutual funds, and other stocks, shares, and bonds.

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