Building wealth is rarely about timing the market or chasing trends. Instead, it’s about structure, clarity, and purpose. At Grey Ledge Advisors, we work with clients to create disciplined investment strategies tailored to their goals. But before a strategy can be built, it’s important to understand the investment vehicles available — and how each fits within the broader framework of risk, return, and taxation.

By understanding the purpose and mechanics of each investment type, investors are better equipped to make decisions that align with their long-term goals. This guide offers a high-level overview of key investment types: what they are, how they function, and where they may belong in a well-designed portfolio.

Equity vs. Debt Securities

Most portfolios begin with a mix of equities and fixed income, commonly referred to as stocks and bonds. These are the building blocks of asset allocation.

Stocks (Equity Securities)
Stocks represent ownership in a company. Investors share in both the upside (capital appreciation) and downside (loss of value). Publicly traded stocks offer liquidity and, historically, the highest long-term returns of major asset classes.

• Primary Benefit: Long-term growth potential.
• Primary Risk: Volatility and loss of principal.
• Tax Considerations: Capital gains (short- or long-term), qualified dividends taxed at preferential rates.

Bonds (Debt Securities)
When you buy a bond, you’re lending money to an issuer—government, corporate, or municipal—in exchange for interest payments and return of principal.

• Primary Benefit: Income generation and capital preservation.
• Primary Risk: Interest rate risk, credit/default risk.
• Tax Considerations: Interest is generally taxed as ordinary income. Municipal bonds may offer tax-exempt income depending on your state of residence.

A balanced portfolio may shift weight between equities and fixed income over time, depending on risk tolerance, time horizon, and cash flow needs.

Mutual Funds & Portfolio Strategies

Mutual funds are pooled investment vehicles managed by professionals. They offer diversification and ease of access, but not all funds follow the same investment strategy.

Growth Funds
Seek companies with above-average earnings potential. These funds typically reinvest profits rather than pay dividends.

• Best For: Long-term investors aiming for capital appreciation.
• Risk Profile: Higher volatility, especially during market downturns.

Income Funds
Prioritize assets that generate consistent cash flow, such as dividend-paying stocks or high-quality bonds.

• Best For: Investors seeking predictable income.
• Risk Profile: Generally lower volatility, but exposed to interest rate risk.

Index Funds
Track the performance of a specific market index (e.g., S&P 500) through passive management.

• Best For: Cost-conscious investors focused on long-term returns.
• Risk Profile: Mirrors market performance; no active attempt to outperform.

Target-Date Funds
Structured around a projected retirement year (e.g., 2050), these funds automatically adjust from growth-oriented to conservative assets as the target date approaches.

• Best For: Retirement savers seeking a set-it-and-forget-it solution.

Tax Implications: Actively managed funds can generate capital gains distributions each year, even if you don’t sell your shares. Placement in a tax-advantaged account can help mitigate this.

IRAs: Traditional, Roth, Rollover & Inherited

Individual Retirement Accounts (IRAs) offer tax incentives to encourage long-term saving. The type of IRA determines how and when taxes are applied.

Traditional IRA

• Contribution Limits (2025): $7,000 ($8,000 if age 50+).
• Tax Treatment: Contributions may be tax-deductible; growth is tax-deferred. Distributions are taxed as ordinary income.
• Ideal For: Investors seeking a current-year tax deduction.

Roth IRA

• Contribution Limits (2025): Same as Traditional, but subject to income eligibility.
  • MAGI Phase-out Ranges:
    $150,000 – $165,000 (single  or married filing separately)
    $236,000 – $246,000 (married filing jointly or qualifying widow)
• Tax Treatment: Contributions made after tax; qualified withdrawals are tax-free.
• Ideal For: Younger investors or those expecting higher future tax rates.

Rollover IRA
Used to transfer assets from a workplace plan (401(k), 403(b)) into an IRA without penalty. Offers continued tax deferral and broader investment flexibility.

Inherited IRA
Created when a beneficiary inherits an IRA. Distribution rules vary based on the beneficiary’s relationship to the original owner, but many non-spouse heirs must empty the account within 10 years (per SECURE Act guidelines).

Employer-Sponsored Retirement Plans

Workplace retirement plans are essential tools for wealth accumulation, often enhanced by employer contributions.

401(k)

• Offered by for-profit employers.
• 2025 Contribution Limit: $23,500 (+$7,500 catch-up for age 50+). The SECURE 2.0 Act introduced a higher catch-up for those ages 60-63 (up to $11,250).
• May offer both Traditional and Roth options.
• Employer matches often boost the value of contributions.

403(b)

• Designed for public education and nonprofit employees.
• Similar to 401(k), but may offer annuity products in addition to mutual funds.

SIMPLE IRA

• For small businesses with fewer than 100 employees.
• 2025 Limit: $16,500 (+$3,500 catch-up). There’s also an increased catch-up for ages 60-63 ($5,250), and for employers with 25 or fewer employees, the limit can go up to $17,600 (+$3,850 catch-up)
• Employer contributions are required, but the plan is simpler to administer than a 401(k).

SEP IRA

• Funded solely by employers.
• 2025 Limit: 25% of compensation or $70,000, whichever is lower.
• Ideal for self-employed individuals or small business owners.

Pension Plans (Defined Benefit Plans)

Provide guaranteed income in retirement, based on salary and years of service. These plans are less common today in the private sector but remain critical in certain public roles.

Tax Considerations: Most of these plans offer pre-tax contributions and tax-deferred growth. Distributions are taxed as ordinary income.

The Role of Strategy

Understanding investment types is important, but how they work together in a cohesive strategy is what drives results.

At Grey Ledge Advisors, we design portfolios through a lens of risk management, tax efficiency, and long-term purpose. Asset allocation, rebalancing, tax-loss harvesting, and account location (taxable vs. tax-deferred) all play roles in preserving and growing wealth. We don’t offer one-size-fits-all advice — we tailor each strategy to your financial objectives, life stage, and tolerance for volatility.

Grey Ledge Advisors brings depth of knowledge, disciplined planning, and personalized attention to each client relationship. Whether you’re just getting started or refining a multi-generational plan, we can help you make informed choices with confidence.

Contact Us to Learn More About Your Wealth Management and Retirement Savings Options

Building a business, consulting on your own terms, and driving growth. The shape of modern work has evolved, and with it, so has the definition of a career. Increasingly, Americans are investing in themselves — launching companies, working as independent contractors, or combining multiple income streams as part of the growing freelance, self-employment, and gig economy.

But while this shift brings freedom, it also brings complexity, especially when it comes to retirement planning. Without an employer-sponsored 401(k) or benefits package, how do you prepare for the long term?

Retirement isn’t just for employees. It’s for builders, creators, risk-takers, and anyone investing in themselves today with the goal of independence tomorrow.

At Grey Ledge Advisors, we partner with entrepreneurs, small business owners, freelancers, and gig workers to create sustainable, tax-efficient retirement strategies. No matter how nontraditional your work path may be, your future still deserves structure.

The Changing Face of Work

Self-employment isn’t a niche. It’s the fastest-growing segment of the American workforce. From app-based workers (Uber, DoorDash, Instacart) to freelance creatives, contractors, and solo professionals, many are building careers outside the W-2 world. And at the same time, entrepreneurs and small business owners are pushing their ventures forward, often wearing multiple hats and prioritizing reinvestment over long-term savings.

But here’s the truth: the earlier you incorporate retirement planning into your business or freelance income strategy, the more flexibility — and financial security — you’ll gain later.

Start with the Basics: IRAs

Whether you earn $5,000 from side gigs or $500,000 from your own business, IRAs remain one of the most accessible retirement vehicles available.

Traditional IRA

• Tax Treatment: Potentially tax-deductible contributions; growth is tax-deferred.
• 2025 Contribution Limit: $7,000 (plus $1,000 catch-up if age 50+).
• Best For: Individuals looking to reduce current taxable income and defer taxes until retirement.

Roth IRA

• Tax Treatment: After-tax contributions; qualified withdrawals are tax-free.
• Same contribution limits, but subject to income eligibility:
  • MAGI Phase-out Ranges:
    $150,000 – $165,000 (single  or married filing separately)
    $236,000 – $246,000 (married filing jointly or qualifying widow)
• Best For: Younger or growth-minded savers expecting higher income or tax rates in the future.

Both Traditional and Roth IRAs are foundational tools. Still, they may not provide enough contribution capacity for high earners or business owners looking to make larger investments in retirement.

The SEP IRA: Built for the Self-Employed

The SEP IRA (Simplified Employee Pension) is a flexible, tax-advantaged solution specifically designed for self-employment — sole proprietors, freelancers, and small business owners.

• 2025 Contribution Limit: Up to 25% of net self-employment earnings or $70,000 (whichever is less).
• Tax Advantages: Contributions are deductible and grow tax-deferred.
• No annual funding requirement—ideal for variable income years.
• Easy Setup: No annual IRS filings or plan administration required.

Small Business Consideration: If you have employees, an SEP IRA requires proportional contributions for eligible workers, making it ideal for solo owners or those without full-time staff.

Solo 401(k): High Capacity with Added Flexibility

For self-employed individuals with no employees (aside from a spouse), the Solo 401(k)—also known as an Individual 401(k) — offers robust contribution limits and flexibility.

• 2025 Contribution Potential:
  • Employee deferral: $23,500 (plus $7,500 catch-up if age 50+).
  • Employer contribution (as your business): Up to 25% of compensation.
  • Combined limit: Up to $70,000 (plus $7,500 catch-up if age 50+).
• Additional Perks: Option to include a Roth component or loan provisions.
• Administrative Note: Annual filing required once assets exceed $250,000.

Best For: High-earning solopreneurs who want to maximize contributions and may want Roth flexibility.

For Entrepreneurs and Small Business Owners

Entrepreneurs often pour time and capital into building their businesses, but personal retirement planning can fall by the wayside. That’s a missed opportunity. Business owners have unique options to integrate retirement savings into their broader financial strategy.

In addition to SEP IRAs and Solo 401(k)s, business owners may consider:

• Defined Benefit Plans: Ideal for high-income owners seeking to make large tax-deferred contributions—potentially over $100,000 per year, depending on age and income.
• Safe Harbor 401(k) or SIMPLE IRA: Suitable for businesses with employees, offering less administrative burden while encouraging employee participation and allowing employer contributions to remain deductible.

The structure you choose can also support business continuity planning, succession goals, and tax efficiency, especially as your company grows or prepares for transition.

Gig Workers: Saving Despite Inconsistent Income

For app-based workers and freelancers with fluctuating earnings, the challenge isn’t a lack of options — it’s consistency. But even modest contributions, made regularly, can grow substantially with time and discipline.

• Automate contributions: Treat savings like a business expense.
• Use high-earning months: Allocate a percentage toward your IRA or SEP.
• Make deadline contributions: SEP IRAs can be funded up to the tax-filing deadline, often allowing retroactive savings and tax deduction opportunities.

Every dollar saved—especially in tax-advantaged accounts—is doing more than you might think. Compound growth and tax efficiency are powerful partners.

Why Work With a Financial Advisor?

Working for yourself often means juggling everything: income, expenses, taxes, marketing, and growth. Retirement planning shouldn’t be another burden — it should be a strategic advantage.

At Grey Ledge Advisors, we bring clarity to complex financial lives. We help self-employed professionals — from gig workers to growth-stage entrepreneurs — create retirement plans that are aligned, scalable, and designed to evolve. Whether you need to lower taxable income, invest surplus cash, or develop a long-term exit plan from your business, we serve as your partner and advocate.