Hey there! Welcome to the Carry Letter 👋 We’ll be exploring the latest financial news and discussing how it affects entrepreneurs like you. Plus, we'll share some awesome wealth creation insights from successful entrepreneurs.

Let’s dive in! 🏊‍♂️

First time reader? Subscribe here.

If you’re earning 4% on your cash, congrats! You’re ahead of most people.

But here’s what many high earners don’t realize: That interest is fully taxable.

And if you’re in a high bracket, your real return might be closer to 2%.

Here’s what you should know:

The “high-yield” savings tax catch:

If you’ve got cash in a high-yield savings account earning 4% APY, that feels like a win.

But here’s what many high earners don’t realize:

That interest is fully taxable at your ordinary income rate.

Depending on your state and tax bracket, you might be giving up 40–50% of that interest to taxes.

So after-tax, your “4%” could shrink closer to 2.5% 

Not quite what you thought you were earning, right?

What’s the alternative?

If you’re looking to optimize your cash, you could explore options that are more tax-friendly.

One strategy? Tax-exempt money market funds.

These are funds that hold things like U.S. Treasuries or municipal bonds, they’re designed to be lower risk, and some of the interest they pay can be exempt from taxes!

Depending on the fund:

• Some are exempt from federal income tax

• Some are exempt from state tax

• And if the fund invests in assets from your home state? You could get both

Here’s what that could look like: 

Hypothetically, let’s say you live in a high tax state like New York or California and you invest in a NY specific money market municipal fund yielding 2.72%.

That may seem like a bad deal, but there’s more than meets the eye. 

That’s because these yields are likely exempt from federal and state taxes, making it almost tax-free. 

To match that yield after tax with typical money market funds or high-yield savings accounts, you’d need a 5%+ APY (which isn’t always available). 

That’s the power of tax-equivalent yield – a major (and often overlooked) lever for high earners.

Final thoughts:

So whether you go the DIY route or use a tool to automate things, I hope your key takeaway is this:

Your cash doesn’t need to sit around getting eaten up by taxes.

With a few small changes, it can actually start working for you.

What’s Happening at Carry Lab?

Here’s what you can expect in the coming weeks

See the full list of events here. ⏰

Want More?

Still can’t get enough? Well, we’ve got you covered!

Think your friends might like it? Be sure to share it with them! 📩

If you want more resources on building wealth as a solopreneur/entrepreneur, check these out:

• The Solo 401k handbook

• The Roth IRA handbook

• The Self-Directed IRA handbook

• The Guide to Paying Less in Taxes

• What is a Solo 401k?

• How to Open a Solo 401k