Why Do Tax Shelters Pose Risks and How Can You Safeguard Against Those Risks

Thomas-Brock-15-Why do tax shelters pose risks and how can you safeguard against those risks

In this video, Thomas Brock explains that the biggest risks of tax-sheltered investments include complexity, unrealistic return expectations, inflation sensitivity, and illiquidity.
Video Transcript

The biggest risks associated with tax sheltered investments are the ambiguous nature of some of them, the complexity of some of them. Oftentimes they can make you to believe there's unrealistic return potential.

Some tax sheltered investments are especially sensitive to inflation. Here I'm thinking about bond like investments such as annuities. This is a big risk of tax sheltered investments.

Illiquidity.

Especially some of the IRS sponsored vehicles I mentioned earlier. Any money that you put into these vehicles can't be touched for a number of years. Decades sometimes.