Final answer:
The main con for ordinary taxable investment accounts is that they do not provide tax-deferred growth, leading to a reduced effective rate of return due to annual taxes on income and the lack of inflation adjustment for income taxes, all of which can erode real investment gains.
Step-by-step explanation:
A con for ordinary taxable investment accounts, such as savings or brokerage accounts, is that they do not offer tax-deferred growth like retirement accounts do. With these accounts, you must pay taxes yearly on the income you earn, whether that income is in the form of interest, dividends, or capital gains.
By contrast, with a Traditional IRA or 401(k), the money invested is not taxed until withdrawal, usually during retirement when the individual may be in a lower tax bracket, providing a higher return on savings in the present. However, these benefits come with specific regulations and limitations, such as penalties for early withdrawals and required minimum distributions at a certain age.