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No. of Recommendations: 1
Subject: mutual fund vs. IRA?
Author: Twilight21 Date: 8/14/00 2:20 PM Number: 725
What is the ACTUAL difference between a mutual fund and an IRA? I was initially interested in opening a trad IRA, but was asked by a rather aimable broker why not consider a mutual fund instead? I liked the long term effect of an IRA, but is that all its good for? What about withdrawals? tax liabilies?
What happens to the funds going into each different account? These may come as silly questions, but it is always good to be definate when it comes down to investing.

Twilight :-)

I would suggest going to Fool School first.

Then check out the IRA section.

This will help you understand for yourself what's going on. I will try my best to summarize for you.

An IRA is a tax advantaged retirement account (Individual Retirement Account). There are two popular types, Traditional and Roth. Go to the IRA section to learn about them.

A mutual fund is, for all intensive purposes, a grab bag of stocks. It is usually managed by a professional money manager at some fee equal to a percentage of your assets.

You can most definitely open a traditional IRA, contribute anywhere up to $2000 (maybe $5000 one day soon) annually and then purchase whatever securities you choose, including mutual funds. There is not an either-or with an IRA and mutual funds. It is more of a cooperative or combination of the two. I don't have a good feeling about this broker person. They should know that, and in making a recommendation like that, they lead me to assume that they do not have your best interests in mind.

Just my too sense
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