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IRA's/Roth IRA's

Posted on 2012-08-19
Medium Priority
Last Modified: 2012-08-31
I wanted to get some information about IRA's/Roth IRA's.  I'd like to make my money "work" for me a bit and I wanted to know the pro's/con's of such investments.  My ideal "dream" would be to pay off my mortgage which I just re-financed in as short amount of time as possible along with also investing on "something" for the future.  Also, if someone knows of a good worksheet for expenses and such, please send me the link as well.
Question by:vulture71
LVL 27

Expert Comment

ID: 38310424
A  IRA's/Roth IRA is just like any other investment account except the tax treatment requires some restrictions on removing funds from the account before certain dates (when you retire).
As such the advantages and risks are just the same as an ordinary investment account. If you put the money in treasury bonds it is safe and does not earn much. If you put it in risky stocks, it may earn more but may loose value.
The difference is the tax treatment of any income (or cap gain). There are limitations on the amount of money which can be put into these kinds of investment account. In general put in as much as you can because the tax treatment is advantageous for most people.
LVL 16

Accepted Solution

dhsindy earned 2000 total points
ID: 38314560
Put money in an IRA with the thought of never using it until retirement.  Put aside the maximum you are allowed if possible especially if your employer deposits matching funds.  The taxes are paid when you withdraw the money like ordinary income provided you are old enough.  If you are to young when withdrawing there is a 10% penalty.

I am not familar with the Roth IRA but it could be better for you depending on your situation.

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