As the end of the year approaches, now's the time when most people start thinking about ways to save on their taxes in April. But with one popular strategy to cut taxes, it makes sense not to wait any longer than you have to -- and it's not even too early to start thinking about using it as soon as possible in 2014.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, discusses the tax-saving method of contributing to retirement accounts such as IRAs and 401(k)s. Dan notes that many people wait until the last possible minute to contribute money toward their retirement, but doing so causes them to miss out on some tax-saving tactics. Dan goes through a couple, noting the advantages of getting high-dividend-yielding investments Annaly Capital (NYSE: NLY ) and ARMOUR Residential (NYSE: ARR ) into the protection of a retirement account as soon as possible. Dan also points out that as companies declare special dividends -- with Boston Properties (NYSE: BXP ) and Wynn Resorts (NASDAQ: WYNN ) already having done so -- owning those stocks in IRAs or other retirement accounts can save you from a big one-time tax bill. Dan concludes that the sooner you contribute, the sooner you start saving with retirement account contributions.
What should you put in your IRA?
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