"Why would you want to pay taxes?" Usually, when saving for something other than retirement, using income-taxable investments is the best way to go. Sure, lots of people use income-taxable investments to save for retirement. But that's only after they've exhausted all their tax-deferred options. Taxable investments may appeal because they allow easier access to money, or because they offer variety.

These after-tax investments include:

• Cash...also known as short-term securities...is money you can get your hands on relatively easily, such as a bank savings account. It tends to be low risk and low return.
• Bonds...sometimes called fixed-income securities...can tie up your money for awhile but may pay income along the way. Bonds offer moderate risk and return.
• Stocks...sometimes called equities...have higher risk, but also can have higher potential for returns.

Each of these investments is made with after-tax money (as opposed to the money that goes into an employer-sponsored plan or IRA before income taxes are figured). Plus, you'll pay income tax every year on any earnings - interest, dividends, capital gains.

"One word of warning..." Stocks and bonds are mighty alluring. But when planning for your retirement, tax-deferred saving is good for you. Have you maxed out your employer-sponsored plan? Have you explored other tax-deferred options?