Question by Claudio F: What is the difference between a roth IRA and a normal investment account by a broker?
1. In both cases I can invest only after tax money.
2. I can withdraw my money whenever I want in both cases.
3. I can only contribute $ 5,000 per year in the roth IRA while I can contribute how much I want with a normal investment account.
So why would I choose to open a roth IRA instead of a normal investment account where I can invest how much I want?
Best answer:
Answer by S
Any growth experiened in a ROTH IRA account is not taxed. Nor is taxed when you withdraw the money.
With a standard investment you will be taxed when you realize any profit by selling the investment.
So take an example where you have a ROTH IRA and a standard investment. Both start at 10,000 and both grow by 10%, to 11,000.
When you withdraw your IRA (assuming no penalties for ealry with drawal), you will get the full $ 11,000
When you withrdraw the investment you will have to pay taxes on the $ 1,000 of growth, so maybe you walk away with only $ 10,700.
This difference could add up to a huge amount over the lifetime of a ROTH IRA
What do you think? Answer below!
I notice from some investment company they offer IRA (that puts money in 2040, 2035, 50/50 or something like that) and IRA CD.
Those numbered IRA are not FDIC insured but the IRA CD is.
What’s the different? If the IRA CD is insursed. It sounds awesome, how come it seems like less people go with that?
thank you
By any chance if anyone know IRA CDs out performed by how much?
Is it worth the risk?
And how high is the interest right now for IRA CDs?
1. In both cases I can invest only after tax money.
2. I can withdraw my money whenever I want in both cases.
3. I can only contribute $5,000 per year in the roth IRA while I can contribute how much I want with a normal investment account.
So why would I choose to open a roth IRA instead of a normal investment account where I can invest how much I want?
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