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The Benefits of Tax-Deferred Growth
As mentioned earlier, every informed investor should be aware of the effects that taxes have on their investments.
A tax-deferred investment, such as an IRA or a 401(k), allows contributions and potential earnings to grow free from taxation. Dollars that would have been paid in taxes stay in your account, where they have the potential to accumulate and compound year after year.*
Coverdell Education IRAs also allow for tax-deferred growth when investing for a child’s higher education.
For more information about the benefits and features of retirement accounts, please click on “Retirement Central” in the top navigation bar.
Past performance is no guarantee of future results. This chart is for illustrative purposes only and does not represent the performance of any specific Cavanal Hill Fund.
*An investor will be subject to income taxes, at there then tax rate, upon withdrawal. Early withdrawals, before age 591/2, may be subject to income tax and a 10% penalty. The Funds do not offer tax advice, please consult your tax advisor to see if tax-deferred investing makes sense for you.
This chart assumes an annual investment of $3,000, an 8% annualized return for a 5-, 10-, 15-, 20-, 25- and 30-year period, and the effects of a 30% tax rate. This chart does not take into consideration different levels of risk, total return, principal fluctuation and varying cost of fees between taxable and tax-deferred investments.
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