Are You Getting Killed in Capital Gains Taxes?

Natalie Pace in Powerscourt, Ireland. Photo: Marie Commiskey.

Are You Getting Killed in Capital Gains Taxes?
Are you paying too much in capital gains taxes, ignoring your retirement plan, or gambling with your future, or are you building lasting wealth?
 
Ask yourself these questions.
Do you put your hottest investments in your Roth IRA?
Do you know what you own in your employer-based retirement plan?
Are you chasing returns in Bitcoin or the Magnificent 7?
Are you gambling with hot tips you see on social media?
Do you have a Health Savings Account?
Are you aware of the Rule of 7?
Are you depositing 10% of your gross income into tax-protected retirement accounts?
 
Here are some of the things that keep us gambling and bleeding cash, instead of building lasting wealth. There are so many ways that we end up making “the system rich” rather than achieving financial freedom ourselves.
 

• Investing in a regular brokerage account, instead of tax-protected retirement accounts, and potentially giving up a third (or more) in capital gains taxes,
• Chasing headlines – investing when things are at an all-time high,
• Gamification of investing – I won! I lost!
• Meme stocks,
• Burdensome student loans,
• Forgotten, low-performing retirement accounts,
• Spending 30% or more of our income on housing,
• Paying off debt before paying ourselves first,
• Selling low when we think we’re in the Apocalypse

 
​​Editor's Note: "Many people, including educated men and women, often get into trouble when they neglect to follow simple and fundamental rules of the type provided [by Natalie]. This is why I recommend them with enthusiasm." Professor Gary S. Becker. Dr. Becker won the 1992 Nobel Prize in economics for his theories on human capital. He also wrote the Preface for Natalie Pace's first book, Put Your Money Where Your Heart Is (2nd edition).

Recently, I did a coaching session with a person who is only 15 years away from retirement, who makes over $100,000 a year and has only about $100,000 in his brokerage account. He also has money in an employer-sponsored retirement plan, which he’s never looked at. He has no clue how it’s invested, what the current value is, or what rate of return he might be getting. Another retired client had money in a government retirement plan. When he found out that the S&P500 had earned 57.5% over 2023 and 2024, and had a 13.1% annualized gain over the past decade, he was mortified to discover that his plan had earned just 2.5% annualized for decades.
 
So, let’s dig into the details of how to build lasting wealth, while also having a little fun. Here’s more information on each of the points I listed at the top of this blog.
 
Do you put your hottest investments in your Roth IRA?
Billionaire Peter Thiel reportedly has over $5 billion in his Roth IRA (source: Propublica). He didn’t pay capital gains taxes on any of his early Paypal and META investments and warrants that are in his Roth IRA, and when he withdraws from the account, he will not pay income taxes (unless the laws change). Most of us should have a Roth IRA (or TFSA for Canadians) that we max out, in addition to contributing to our employer-sponsored retirement plan (up to the match). Our self-directed Roth IRA gives us freedom of choice, a chance for a much higher rate of return, a shield from capital gains taxes, and the benefit of tax-free distributions in retirement.
 
Do you know what you own in your employer-based retirement plan?
Rollovers are very easy and they offer us the world of investing. Many times our employer-sponsored retirement plans only offer a few choices. That means that we can never truly get properly diversified if we are only choosing to invest in our 401K or RSP, unless we’re able to self-direct. Some plans offer this, while others do not. Many employer-sponsored retirement plans underperform the market, especially if we’re using target date funds or an annuity. (Contrary to their promises of diversification and that you can’t lose, these funds are not the great choices they purport to be, for multiple reasons.) You can learn more in these blogs.
 
Is Your Safe, Income Strategy Losing Money?
https://www.nataliepace.com/blog/is-your-income-strategy-losing-money#/
 
Get Safe and Hot in One Easy Plan
https://www.nataliepace.com/blog/get-safe-hot-with-one-easy-plan#/
 
Are you chasing returns in Bitcoin or the Magnificent 7?
When stocks and crypto are high, everyone’s a millionaire. When we hit a Crypto Winter or bear market, things go radio silent. The truth is that we should be capturing gains at the high and adding more at the low – which is the opposite of chasing headlines and spectacular gains (after they’ve already happened). Our simple pie chart strategy encourages us to invest in the hottest opportunities, in an age-appropriate, diversified way, and also prompts us to be on the right side of the trade. Learn more in my book The ABCs of Money 6th edition and at our October 11-13, 2025 Financial EDU Retreat. (Register for the retreat by July 31, 2025, to receive the best price.)
 
Are you gambling with hot tips you see on social media?
Gamification made investing popular a few years ago, especially when there was extra Stimmy money floating around. However, many of 2021 meme stock companies are either struggling to stay alive or already dead in the water, including Bed, Bath and Beyond, Blackberry, AMC Theatres and Gamestop.
 
Also, I’m seeing so many people who leapt into over 50 different companies without the proper due diligence. (Not even a professional analyst would attempt DD on that many holdings.) Not only are they not doing any research into the companies, but they are not even reading the complete blog or email that brought up the tip. For instance, even though I’m very excited about air taxis, I’m not investing yet.

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Archer Aviation has been selected as the official air taxi of the 2028 Los Angeles Olympics.

Is there a way to invest in hot exciting new industries without taking on a second job doing trading and proper due diligence? The answer is absolutely yes. Targeted ETFs can focus on cybersecurity, artificial intelligence, gold, silver, Bitcoin, Ethereum, and even hot countries, for international diversification. funds have multiple companies, which reduces the risk of betting on one horse.
 
Another important aspect of successful investing is to capture gains at the top and buy more at the low – rebalance 1-3 times a year. This is only possible in our self-directed individual retirement account, which is why we want to have our own self-directed retirement account, in addition to our employer-sponsored RA.
 
Do you have a health savings account?
If you are healthy and spending an arm and a leg on health insurance, then it’s time to look into a Health Savings Plan with a high-deductible insurance plan. This will save most people thousands or even tens of thousands of dollars annually, while building up the best long-term health care plan for retirement. Don’t assume that your employer is paying your premiums. Many employers take the premiums out of our paycheck. Add up the amount that is being deducted and you might discover that you are giving thousands of your hard-earned money to the health insurance company.
 
Read my HSA blog and The ABCs of Money 6th edition for more information.

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Are you aware of the Rule of 7?
Have you doubled your money over the last seven years? The stock portion of our portfolio will double in 7 1/2 years if it’s earning 10% annualized and we are religious about depositing 10% of our gross income. Check out the savings versus investing chart below. This sample plan is based on someone earning just $40,000/annually, who can become a millionaire thanks to the power of contributing annually, compounding gains and avoiding capital gains taxes.

As you can see in the chart below, stocks have achieved 10% gains for three decades. As I mentioned above, the S&P500 earned 57% in the 2-year period of 2023 and 2024.

Are you depositing 10% of your gross income into tax-protected retirement accounts?
Investing is the only ticket out of the rat race. Even someone of modest means can achieve financial freedom by focusing on paying themselves first, learning a time-proven investing strategy (such as our pie chart system with 1-3 times a year rebalancing), and by getting creative about adopting a Thrive Budget. This requires strength, courage and wisdom, rather than just buying into the current high cost of things.
 
Most of us will have a few different retirement accounts – our employer-sponsored plan (free money up to the employer match), our self-directed IRAs, our HSA, our children’s college funds. When doing our rebalancing, it’s important to consider all these accounts, as well as our checking, savings, crypto and other paper assets, to see the complete picture. We can then mockup a sample pie chart and use that as our guide for capturing gains high and adding more low. We have many resources, including free videocoaching. Email [email protected] to learn more.
 
Are you waiting to pay off debt before investing?
We’re often doing the simple math, thinking, “I’m paying almost 30% on my credit cards, so I’ll wait until I pay that off before investing.” Sadly, that mindset keeps us trapped in a debt prison that few can escape. A debt problem is a budgeting challenge. It’s no reason to stop providing for our own future and investing to increase our personal net worth (which will actually help with the debt problem). Get started by reading the Debt Solutions section of The ABCs of Money 6th edition. We also have a free Debt Solutions videocoaching series. Email [email protected] with Debt Solutions Videocoaching in the subject line to receive free access to this series.
 
Spending 30% or more of our income on housing
At some point, we just want to get a place away from our parents and start adulting. However, if our housing budget is taking up 30% or more of our income, then we are making the landlord or bank rich at our own expense. It’s hard to enjoy our freedom if we can’t afford any fun.
 
There are many ways that we can get creative about housing, which will allow us to have room in the budget for paying ourselves first, for charity, for education and for fun. These things can all add up to living the life of our dreams, instead of punching the clock, feeling buried alive in bills or struggling to survive. The Thrive Budget section of The ABCs of Money 6th edition offers essential tips. You might also consider playing our Financial Freedom Game. Click to access the online version on my YouTube.com/NataliePace video channel.
 
Chasing headlines and pump and dump schemes
Most of us don’t realize that most of the emails and social media ads we see are pay-to-play. Red flags that we are being suckered in include:
 

• Getting the tip online, in our email or even from a friend,
• If we’re told to act fast or miss the opportunity,
• If it’s difficult to find who is behind the scheme, or,
• If the company is based out of a homestead state.

 
Even celebrities have been caught up in schemes that turned out to be fraudulent – and, even worse, were spokespersons who were paid to convince others to jump in, too. Tom Brady and Kim Kardashian are just two examples of this. However, any time you see a celebrity promoting something on social media, it’s a paid advertisement. The star is getting some sort of incentive or compensation.  
 
A better plan is to invest in what we think is hot, dollar cost average into it if it’s near a high and then capture gains when it shoots the moon. That way, when we hit a Crypto Winter or a bear market, we have kept our money safe from the staggering losses, while also giving ourselves the liquidity to buy low instead of having to endure losses of 50% or more of our wealth for the duration of the downturn.
 
It’s been a long time since the Great Recession. Many investors have never seen an extended downturn. However, it’s important to remember that we never want to confuse a bull market with wisdom, and that recessions can take years to recover – during which time most of us will experience extreme financial hardship. In the Dot Com Recession, the NASDAQ Composite Index lost 78% (a million dollars dropped to just $220,000) and took 15 years to recover.
 

Options and day trading
The Nobel Prize winning economist who wrote the book on options trading was on the board of one of the most highly leveraged, biggest bailout in U.S. history. Options and day trading are like playing tennis with Serena Williams. The person on the other side of the trade could be a hedge fund with a team of analysts, who employs high-frequency trading and algorithms, and are even able to legally step in front of you in the priority of their trades. It’s heartbreaking to watch people brag about their returns one month and then get loaded up with high-interest debt that many will struggle to pay and free themselves from. Yet that is a story that I hear far too often: following the wrong guru and watching helpless as our dreams turn to dust – and staggering debt.
 
Crypto and capital gains
A few years ago, the SEC approved Bitcoin and Ethereum ETFs. While we used to have to pay high capital gains on our crypto, we can now purchase an ETF within our tax-protected retirement account. Part of our wealth plan must include reducing taxes. We don’t want our gains flying out the window. Refer to the top of this blog where I discuss the benefits of putting our hot investments in our Roth IRA.
 
Bottom Line
It’s easy to get caught up in stories that keep us running in the hamster wheel rather than accumulating real wealth. It’s a lot of work trying fancy tricks and get rich quick schemes. At some point, we should understand that others are benefitting from our fixation more than we are. A good plan costs less time and money – both of which can be better spent on things we like a lot more than trying to game a system (that, like Vegas, has many tricks to game us).  
 
The power and magic of the Thrive Budget and a time-proven investing system will transform our lives immediately and forever. That’s why we call it the life math that we all should’ve received in high school. The sooner we educate ourselves about proper financial strategies, instead of allowing ourselves to be tossed around by the current economic conditions, headlines, hot tips, the high cost of housing, et al., the faster we can start creating the life we really want to live. Wisdom and right action are the cures.
 


Register now to join us at our online Financial Freedom Retreat Oct. 11-13 2025 where you'll learn how to protect your wealth, save thousands annually in your budget and how to hedge in a volatile Debt World. If you'd like a life-changing adventure of a lifetime, be our guest at a royal manor house in Cornwall, England, March 12-19, 2027. (With just eight rooms available, this exclusive, private, bucket-list adventure sells out a year in advance!) Call 310-430-2397 or email [email protected] to learn more. The 2025 Restormel Retreat was a magical and royal experience. Click to learn more. 

Receive the best price when you register for the Financial Freedom Retreat Oct. 11-13 2025 by July 31, 2025. Request testimonials at [email protected]. You can also view some on the flyer page of the retreat. 

Learn how to:

* Invest in hot industries, such as Nvidia, artificial intelligence, and quantum computing,
* Hedge against a weaker dollar,
* Invest and compound your gains,
* Green your retirement plan,
* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence, quantum computing and crypto),
* Evaluate stocks,
* Avoid capital gains and financial predators,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] or call 310-430-2397 to learn more and register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.

Receive the best price when you register by July 31, 2025. Visit NataliePace.com to learn more. Call 310-430-2397 or email [email protected] for pricing, additional information and to register.

Join us for our Restormel Royal Immersive Adventure Retreat. March 2027. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. Register now to receive the best price, the best room and eight private, prosperity coaching sessions. There are only 8 rooms available. This retreat includes an all-access pass to all of our online training for a full year for two. Considering the perks, you're receiving a 65% discount to learn the life math that we all should have received in high school, and the room is free! Email [email protected] to learn more. The best rooms at the 2025 retreat were sold out in 2024! Yes, it's a great idea to register and start transforming our lives now!

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Check out Natalie Pace's Substack podcast on Apple and Spotify.
Watch videoconferences and webinars on Youtube.

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.