A solid financial future should include three components: saving for short-term needs, investing for mid-term goals and planning for your retirement income. They're all important, and ignoring one can put you at risk of not achieving some of your goals. If you're already saving in a bank account and contributing to a retirement plan, you're off to a great start, but you may be overlooking the middle pillar.
What is a brokerage account?
A brokerage account is a way for you to buy a variety of assets—mutual funds, stocks, bonds, CDs and more—while taking advantage of research tools and education available to help you choose the right investment options for your risk tolerance.
Investing can be a smart and efficient way to build wealth. Many people think that to have a brokerage account you have to buy individual stocks or be an active trader, but investing through a brokerage account is similar to what you do in your 403(b) or 401(k) retirement plan. The difference is that those types of accounts are specifically designed to provide you with money you can draw on in retirement.
It's likely you have goals other than what you have planned for retirement. These could include buying a new car, remodeling your kitchen or even taking a once-in-a-lifetime vacation. Investing with a brokerage account is a way to help attain those goals. That doesn't mean you should stop saving or stop contributing to your retirement account. You simply reallocate a portion of your money—through a one-time contribution or on a regular basis—to a brokerage account to help you with those other objectives. If you open a brokerage account with TIAA along with a retirement account and a bank account, you'll also have the ability to easily review all of your finances through one portal and you can easily transfer money to help fund your accounts.