Taxable account
An ordinary brokerage or bank account with no special tax treatment, where interest, dividends and realised gains are taxed in the year they arise.
Also called a brokerage account or a non qualified account, this is the default container for money held outside a retirement or education plan. Nothing caps what goes in, no age rule governs what comes out, and no penalty attaches to spending it whenever you like. The price of that freedom is tax as you go: dividends and interest are taxable in the year they are paid, even if you reinvest every penny and never sell a thing.
That annual drag is what makes the account look worse than a sheltered one over a long horizon, because tax paid each year is money that stops compounding, and the compound interest calculator shows how that widens with time. The effect grows with turnover as well, so a holding that pays little income and is rarely traded suffers far less of it than one that pays out heavily.
The mistake is concluding it is simply the worst place to hold anything. In the United States a taxable account offers things a sheltered one cannot: long term gains are taxed at preferential rates instead of as ordinary income, losses can be realised and used through tax loss harvesting, and assets held at death may pass to heirs with the basis reset to their value at that point, so a lifetime of unrealised gain escapes capital gains tax altogether. Which account suits which holding is a question about the holding as much as the account.