2006-11-09 11:09:57 · 4 answers · asked by thù tỉ tỉ 4 in Business & Finance ➔ Personal Finance
yes. but if you try to take anything out of it, you will pay nearly half of your savings to the government, because it is not taxed when you put it in. If you wait until you retire, there is no penalty, but yes, it is an interest earning savings plan for retirement.
2006-11-09 11:18:54 · answer #1 · answered by designerista 4 · 0⤊ 0⤋
Depending what instruments you use (most people use common stock mutual funds), your IRA will earn capital gains, dividends, and perhaps some interest. too.
Over time, the gains will mount up. The annual gain, on average over a period of 10 or more years, will be between 8% and 12%, most likely. In some years it may be more; and in bad years, the value may drop; but over time the average should be near 10% for common stock funds. Bonds will earn less, of course.
But you must put in a sizeable amount early in your wait before the later annual gains will be large enough to make further contributions unneeded. Start early, stay consistent, and when you can, sock-away as much as possible.
People who do this over a period of 20-30 years can often retire early.
2006-11-09 19:21:23 · answer #2 · answered by artaxerxes-solon 3 · 1⤊ 0⤋
It depends entirely on how it is invested. An IRA is NOT an investment, or even a type of investment. An IRA is a shell that protects an investment from taxes. It can be invested in almost anything. Your returns will be the same as investing in the same thing outside of an IRA without the current taxes.
2006-11-09 19:55:46 · answer #3 · answered by STEVEN F 7 · 1⤊ 0⤋
Yup. Do your homework to pick the one that's right for you. Lots of choices.
2006-11-09 19:17:11 · answer #4 · answered by normy in garden city 6 · 0⤊ 0⤋