In this clip we talk about the differences between 401k plans and IRA’s. #rothira #ira #401k
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When it comes to planning for retirement, saving money is crucial. But with so many options available, it can be hard to decide where to invest your hard-earned money. Two popular choices for retirement savings are the 401(k) and the Individual retirement account (IRA). But which one is better? Let’s take a closer look at both options to help you make an informed decision.
401(k):
A 401(k) is a retirement savings plan that is offered by employers. With a 401(k), employees can contribute a portion of their pre-tax income into a designated account. Some employers also offer to match a percentage of their employee’s contributions, effectively doubling their savings. The money in a 401(k) account can be invested in a variety of assets, such as stocks, bonds, and mutual funds, to help it grow over time.
One of the main benefits of a 401(k) is the employer match, which essentially gives you free money to put towards your retirement savings. Additionally, because the contributions are made with pre-tax income, you can lower your taxable income and potentially reduce your tax bill. However, 401(k) plans often have limited investment options and high fees that can eat into your returns.
IRA:
An IRA is a retirement savings account that individuals can open on their own, regardless of whether or not they have an employer-sponsored plan. There are two main types of IRAs: traditional and Roth. With a traditional IRA, contributions are typically made with pre-tax income, and the money grows tax-deferred until it is withdrawn in retirement. With a Roth IRA, contributions are made with after-tax income, but the money grows tax-free, and qualified withdrawals in retirement are also tax-free.
The main advantage of an IRA is the flexibility it offers. With an IRA, you have a wider range of investment options compared to a 401(k), and you have more control over your investment choices. Additionally, IRAs have lower fees compared to many 401(k) plans, which can help maximize your returns.
So, which is better: 401(k) or IRA?
The answer ultimately depends on your individual financial situation and goals. If your employer offers a 401(k) match, it’s generally a good idea to take advantage of that free money. However, if you are looking for more investment options and lower fees, an IRA may be a better choice for you.
In fact, many financial advisors recommend using both a 401(k) and an IRA to maximize your retirement savings. By contributing to both accounts, you can take advantage of the benefits each option offers and diversify your retirement savings. Ultimately, the key to a successful retirement savings strategy is to start early, contribute consistently, and invest wisely. Whether you choose a 401(k), an IRA, or both, the most important thing is to get started and stay committed to building your retirement nest egg.
If your company doesn’t match, how much money should you invest in your 401k before invest in a roth?
With an IRA, you can contribute 6000$ per year, a 401K you can contribute 19500$, not including the employee match. Also, let's not forget about the HSA, which allows you to contribute and invest the contribution.
Sup doc
I love the fact that they acknowledge that every person has a different situation and different goals. A lot of these other finance personalities just give the one size fits all perspective.
In my opinion
1. Max out company match(if employer has it), it's free money
2.Roth 401k(if your employer has it)
3. Roth IRA
4. Traditional 401k
5. Traditional IRA.
In that order for most people.
Both of these account are retirement traps.. It's about cash flow, rather than locking up money and relinquishing control of your money and crossing your fingers that the returns are as expected to be. There's no guaranteed return, just historical assumptions, you only can have you money grow in one place. Infinite banking will allow you liquidity, control and ability to earn interest while making other investments.
Reward to Risk ratio with trading should be 3 to 1 or higher
I got the Thrift Savings Plan (U.S. Government employee version of the retirement contribution) due to my military service.
I'm trying to self-direct my Roth IRA.
You all make it so simple. And I’m a lawyer. Love yal for this content. Please tell Ian I’m @nigelpesq on IG abt the futures program
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I have a 457 I don't have to wait to I'm 60 or 70 to touch it. As soon as I retire I can touch it
Use both. One to lower your taxable income and the other to gain as much interest on the stock market with out having to pay taxes on gains and you can always take the money out that u put in with no problems
Without watching the video neither one is good but at least the IRA you own it and not your employer
My company offers a 401k match but I was only going to be at the job for 6 months. Should I get it with all the fees
It's not a question of what is better. They each have a purpose. 401k you get an employer match. That's "free" money. An IRA you can only contribute up to $5500 per year if your younger than 55 so if possible you should contribute to both. You should also contribute to a Roth IRA if you are within the income threshold.
Self direct thru your IRA an you can buy real estate an small businesses
Fidelity allows you to invest in index funds, mutual funds, and ETFs and their fees are less than Vanguard because Fidelity has many zero fee indexes. Newbies should invest up to the match from their employers then max out the Roth IRA, if income limits allow it. Next step is to max out HSA then go back to 401K and max out. If a Roth 401K is offered then it should be chosen over the pre-tax 401K. Assumptions are that one already has or is prioritizing a 6 month emergency fund and debt pay off. Hope this helps the retirement planning newbies.
Can’t go wrong with either, but it all depends on what you think your tax bracket is gonna be when you retire. If your take home pay when you retire is gonna be less than what you make now, then 401K is the way to go because you’ll get taxed a lower tax bracket when you retire. Either way, if your 401K has a company match, you always go with the 401K up until at least the same percentage of the company match. That company match is literally free money, and will almost certainly be a higher rate than the mutual fund fees in your 401K. Also, don’t sleep on compound interest and dividends that will likely be better than the mutual fund fees.
Both are very good. No wrong way to invest
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just do yourself a favor and do both. take the match to the max with the job. don’t leave a single red penny on the table!
401(k) plans—and SEP and SIMPLE IRAs—are tax-deferred retirement savings accounts offered by employers.
Individuals can also set up a traditional or Roth IRA.
IRAs generally offer more investment choices than 401(k)s, but permitted contribution levels are much lower.
Neither! Buy hard metals.
Both
Yo