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URL:  http://boards.fool.com/well-first-strictly-speaking-investing-is-not-15477200.aspx

Subject:  Re: Help! My Social Security is in Lucent Date:  7/31/2001  12:23 PM
Author:  HamletsMill Number:  46834 of 739979

Well, first, strictly speaking investing is not the same thing as saving. Saving is simply reserving money for a future date, investing is lending that money out with the hope of a future gain - I know, most people don't think of that way, but consider: when you deposit money in a bank you are lending the bank the money in exchange for interest received (and the bank in turn lends it out to someone else, the money isn't ever put aside); the same in a more indirect way holds true for buying stocks, you are buying from someone their part-ownership of a business, you hope to gain from the future stream of profits of that business, however you could lose your investment. Putting money at risk for future gain is the fundamental difference between saving and investing.

Second, what an IRA does is encourage to invest by offering a tax deduction, not allow - after all no one stops you from investing outside an IRA account. As for delaying that heavy hand, a Roth account takes that hand completely away. Yes, you do pay taxes on the money you are putting into a Roth, but then you would have paid them anyway. What the program does is nudge people into being sensible - which was the point of the response to the original query.

BTW, I could have given a perhaps even better example of a government social program that promotes responsibility - the G.I Bill of Rights.


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