HISA vs. Market Investment (US)

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Compare HISA vs. Market Investment in the US. See how annual income taxes affect HISA growth and how lower long-term capital gains tax benefits investments.

Last update Dec 2024
  • Scenario 1: HISA Growth
  • Scenario 2: Market Investment Growth
  • Which One Is Higher (%)

This chart compares HISA growth, taxed yearly at your income tax rate, to market investments, where realized long-term gains are taxed at a lower rate. Note how annual taxation slows HISA growth, while tax efficiency boosts investment.

# Years from Now
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The amount of money you plan to allocate.

A =

The annual interest rate offered by the High-Interest Savings Account (HISA). This is the rate provided by your HISA provider. Note that market investments, whether bonds or stocks, are governed by the "Market Investment Return" rate below.

B =

Your marginal income tax rate, which impacts the after-tax returns of your HISA interest. This rate applies to HISA interest income.

C =

This rate applies to gains from investments held for over a year, and is lower than regular income tax. Most people pay 15%, though it can be 0% or 20% based on income. It offers tax advantages compared to HISA, which is taxed yearly.

D =
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Time Value Assumptions

Heads Up!

If you're using Cost Basis (cb) for calculating capital gains:

Please be aware that very few countries currently use inflation-indexed cost basis. Double-check your local tax rules before publishing.

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How is Cash Value calculated?

This scenario calculates the growth of your investment in a High-Interest Savings Account (HISA). Annual interest is taxed at your marginal income tax rate, effectively lowering the growth rate. The yearly taxation also diminishes compounding, making growth slower over time compared to tax-advantaged investments.

Decisions / Expectations

(Expressions are evaluated at Year 0 only.)

E =

Calculations

(Expressions are evaluated at every year.)

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