Thursday, June 9, 2011

Investing Within an IRA

The other day, I posted about starting a list of 99 things I'd like to accomplish in 999 days. I talked about 5 of the financial goals I've set for myself. #3 was investing in our IRAs on a consistent basis. So, I've been spending some time researching IRA accounts.

I've found that the easiest way to be consistent with investments is to do it automatically. An IRA, of course, is just the basket that holds your investments, so I've been researching convenient ways to participate in online trading where I have access to mobile trading and an online broker.

Here are some things I've learned while researching IRAs:

  1. Stock trading isn't your only option for investing inside of an IRA. You can also invest in bonds, mutual funds, as well as other assets such as real estate.
  2. You pay taxes on the back end with a traditional IRA (when you withdraw the money in retirement), but pay taxes on the front end when you invest in a Roth IRA. Both accounts grow tax free while the money is in the account.
  3. There are income limits for contributing to a Roth IRA.
  4. Roth IRAs are more flexible. You can withdraw some of the money early, and can leave the money in there for as long as you want. With a traditional IRA, you are required to start withdrawing money by the age of 70 1/2.
  5. SIMPLE and SEP IRAs are other options for small business owners and those who are self-employed.
Hope you found this helpful! Investing can seem intimidating at first, but like with all of the important things in life, it's worth it, and is not so bad if you just take it one step at a time.

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Investing Within an IRA

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