So my questions are:
-How does investing in a taxable account work? How is it different than investing in a 401k in terms of taxes?
-I am a little hesitant to invest a lot of money since the market has been doing well for so long, but I know you can’t time the market. So I was thinking about investing some money each month (maybe $2-3k, and ramping it up if the market goes “on sale” (such as during a recession). I was also considering putting it all in at once. If I did this and the market crashed, how would it affect my long term wealth? Which strategy would you recommend?
Welcome.
You may first want to read and and understand the
Investment Order sticky. It will help you understand the answers to your question
Investing in a taxable account is pretty straightforward. You choose a broker (e.g. Vanguard, Fidelity, Schwab), open an account, and deposit money into whatever you want (e.g. an SP500 index fund, individual stock, bonds). Most funds require a minimum, though Vanguard and Fidelity have eliminated the minimum for their most popular index funds. When you want to sell, you put in a sell order. If you've held the investment for >1 year you will pay long term capitol gains taxes only on the gains (the amount it has gone up in value), which for most people will either be 0% or 15%. You typically pay these when you file your income taxes.
Investing 'some each month' as opposed to dumping it all in at once is called 'Dollar Cost Averaging'. Most of the time it is less optimal that putting all your money in at once (called "lump-sum investing') - because the amount of time you spend in the market is of primary importance. Of course if it makes you nervous you can dollar-cost-average( DCA) your cash as you see fit. Just put a plan in action and carry it out.
Another resource you may find helpful:
https://jlcollinsnh.com/stock-series/This is a very easy to understand series of posts which will address investing, tax advantaged / taxable accounts, 'why vanguard', DCA and many other important topics.