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Author: W401K Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75791  
Subject: Re: IRA v. Mutual Fund Date: 12/2/1999 11:05 AM
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An IRA is an Individual Retirement Account.
In this type of account, the money you contribute can be deducted from your taxable income. So if you make $50,000 per year and contribute $2,000 to an IRA, your taxable income is only $48,000. The earnings on your contribution are tax deferred, menaing if you contribute $2,000 and it grows to $2,500 you do not pay capital gains taxes. You only pay taxes when you withdraw the money. Withdrawals generally are not allowed until you reach age 59 1/2. There are some exceptions. If you do withdraw prior to this, you will pay regualr tax plus a 10% penalty.
Money in an IRA con be invested in anything you wish. Stocks, Bonds, Mutual Funds, CDs, etc.
Mutual funds are an investment option for people who don't want to invest in a single stock or bond. ou get diversification because a mutual fund owns hundreds of stocks in its portfolio.
Search the FOOL web site for much more detailed information on IRAs and Mutual funds
Good luck
Bill
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