What is the Best IRA?
The best IRA is the one that best fits with your needs. Each individual and couple has their own financial needs and goals, so it is impossible to choose one IRA and declare it the best fit for everyone. There are four different types of IRAs, or individual retirement accounts, used for retirement planning. There is an additional type of IRA, known as an educational IRA that is used to set aside money for education. The four types of IRAs used for retirement are Traditional, SEP-IRA, Simple, and Roth. To decide which is the best IRA for you, it helps to understand the basic facts about each. It is important to remember that this is only a guideline, and any IRA decision should be discussed with a financial planner. A traditional IRA allows you to contribute $2000 US dollars (USD) annually for retirement. You can normally deduct some or the entire contributed amount on your taxes. The amount that you deduct is decided by the amount of your adjusted gross income and whether you are also
The information that I am about to go over may be very elementary for some. When I discuss this with some financial people, they scoff at the subject and say things like, “NO DUH!” and “Everyone already knows this!” But what I have found is that most consumers DON’T know this, and as a matter of fact, I myself was not taught this concept. So, I will base this, on what people are being told. Many people nowadays are being told something like this. Save money on your taxes by putting as much money as you can into a qualified (tax deferred) account. Let your money grow tax free so that you can reap higher benefits in the end. But is this true? Let’s put that theory to the test. Let’s say that you have $200 a month to invest in an account. You can put it in a tax sheltered account, or you can put it in a regular account. Let’s assume that you will get 12% return for 30 years and that the tax rate is 20%. On $200, if you take out the tax up front, you will have $160. If you invest $160 at 1
