All, I am a young investor, who has been convinced that planning for retirement early is very necessary. I have read through the differences 'tween Roth and Trad. IRAs, and seem to be confused about a single point. I realize the $2K/annum limit on either acct., however, much has been mentioned of investing in stocks from monies within the IRA itself. My question is, simply, is an IRA a cash account (like an advanced savings account w/a fixed interest rate), or is it more like a portfolio account, where any dividends can increase the holdings of the account, outside of the yearly limit. If the latter is true, are there any limits or tax considerations on the dividends? Any information on this would be surely appreciated. Please post replies, or hit me at Xanathas@yahoo.com.TIA,Xan
Dividends can increase the amount. This is your investment gain. You can buy stocks etc. in your account.
An IRA is a type of account. You can put $2000 a year into it, and then buy with that money whatever the custodian lets you. If the IRA is at your local bank, they will offer CDs, which would offer interest at a fixed amount. If the IRA is at a mutual fund company, they will offer you mutual funds. If the IRA is at a discount or even full-service brokerage, they will offer choices, and most of us would choose stocks. Once you put money in it, it is not taxed until you take it out, no matter how many millions you make by buying the best stock of the year <G>. If it is a Roth IRA, and you leave it alone 5 years or until age 59 1/2, it is never taxed. An IRA is a good thing. You can have more than one if you wish. Choose your custodian on the basis of what type of investment you want to put into it. Best wishes, Chris
Yeah, what he said too.I have multiple IRA's, well actually only three, no, that's two. Anyway, they are great investment vehicles.
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