| Investment Account Basics
Deciding where you are going to put your investments is just as important as deciding which investments you are going to buy. You may buy the greatest stock, mutual fund or ETF around, but if you put it in the wrong type of investment account, you could end up costing yourself a lot of money. As an individual investor, you've got choices when it comes to deciding what type of an investment account you want to use. In fact, you don't even have to limit yourself to just one investment account. You can open multiple different accounts to take advantage of everything they have to offer. To figure out which investment account(s) is right for you, you will need to find the answers to questions like: - How much money do I want to invest? - Do I need easy access to my money before I retire? - Do I think I'll be in a higher tax bracket now or at retirement? - What investment accounts do I qualify for at my current income level? Finding the answers to these questions will make determining which investment account(s) to open a breeze. Types of Investment Accounts Chances are, you have probably heard of most of the investment account types individual investors typically use because there really aren't that many. Here's a quick list of the most popular account types: - 401(k) plans - IRAs (Individual Retirement Accounts) - Roth IRAs (Individual Retirement Accounts) - Taxable accounts 401(k) Plans 401(k) plans are company-sponsored retirement plans that allow both you and your employer to contribute money toward your retirement. During the past few decades, 401(k) plans have been replacing company pensions as a company's retirement benefit of choice. Click here to learn more about 401(k) plans. IRAs (Individual Retirement Accounts) IRAs (Individual Retirement Accounts) are investment accounts that allow you to invest pre-tax dollars toward your retirement. Unlike with 401(k) plans, which are company sponsored, you get to choose which broker you want to use for your IRA and what investments you are going to put in your IRA. Click here to learn more about IRAs (Individual Retirement Accounts). Roth IRAs (Individual Retirement Accounts) Roth IRAs (Individual Retirement Accounts) are investment accounts that allow you to earn tax-free profits on your retirement savings. Unlike with a traditional IRA, where you get a tax break as your money goes into your account, you get a tax break as your money comes out of your account with a Roth IRA. Click here to learn more about Roth IRAs (Individual Retirement Accounts). Taxable Accounts Taxable accounts are investment accounts that don't have any tax perks related to retirement. With a taxable account, you simply put your money in, pay taxes on your gains every year and take your money out whenever you want it. Click here to learn more about Taxable accounts.
Let's get started by learning a little bit about 401(k) plans.
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