Regardless of whether you have a retirement account such as a 401(k) or IRA, you can also open a regular taxable investment or brokerage account directly with an investment or brokerage firm. The account may not offer any tax benefits but it still allows you to invest available cash and have it grow over time, contributing to your household nest-egg. Following a passive investing strategy also helps to keep tax payments relatively low in a taxable account.
Brokerage accounts typically require you to pay per transaction. That is, every time you buy or sell stocks or ETFs you will pay a brokerage commission. If you choose a full-service brokerage firm, a broker will be available to recommend purchases or sales of securities and to implement those trades on your behalf.
If you choose a discount brokerage firm, the firm will execute your trades, but will not provide you with any advice. Discount brokers, as the name implies, charge lower commissions than full-service brokers.
As a passive investor you neither need nor want active investing advice, especially if that might take your focus away from the prescribed passive path. You also want to minimize fees. Using a discount broker instead of a full-service one makes sense on both fronts.
If you do your trading through an account with an investment management firm such as Fidelity or Vanguard, you may not have to pay commissions for buying or selling ETFs or mutual funds managed by the firm.
In any taxable account, earnings you receive in the form of dividends from stocks or interest from bonds will be taxable in the year those earnings are received. If you sell any stocks or bonds you may also realize a capital gain (if sold for a profit) or a capital loss (if sold for a loss). In the case of a capital gain, you will be subject to long- or short-term capital gains taxes, depending on whether you held the investment for more or less than a year. Long-term capital gain tax rates are typically lower than short-term gain tax rates.
From a pure diversification perspective, if you have one of each of these accounts: a 403(b), a Roth IRA, a Traditional IRA, and a discount brokerage account, they may all be investing in similar stocks, bonds, mutual or exchange traded funds. If that’s the case, you may get relatively little diversification benefit across these accounts. You could, of course, purposely hold very different assets in each account, carefully selected to make the most of diversification benefits.
 Depending on the size of your investment earnings, you may also be subject to Net Investment Income Tax.