in terms of a 401k or a IRA account, things of that nature. I was looking for an account with the most potential for compounding. Please fill me in if you can...
2007-01-03 07:46:24 · 4 answers · asked by justin m 1 in Business & Finance ➔ Investing
Most compounding comes from the investments giving you the highest rates of return every year. All you can do is find good funds (regardless of any account) that has the potential to give good returns year after year.
If you are concerned about the tax affects, then pre-tax saving avenues like 401k, IRA obviously are the better choices over the post-tax savings because your tax savings are also compounded over that period.
Good luck.
2007-01-07 02:34:44 · answer #1 · answered by Freddy 2 · 0⤊ 0⤋
The degree of compounding results from what you put IN the account, not what type of account it is. IRAs, 401-k's, all of those are good, but the important thing is to choose the right type of investments. In that context, perhaps the IRA is better, because it usually allows more choices than most 401-k's do.
Probably the best thing will be to invest in stocks. I prefer international stocks these days.
2007-01-03 08:06:32 · answer #2 · answered by Anonymous · 0⤊ 0⤋
They all ALLOW compounding. The only thing that WILL compound is an interest paying investment, like a CD, money market, savings account. Stocks & mutual funds dont pay interest, they pay dividends. Technically, they dont compound, they reinvest. Even though bonds pay interest, they normally dont reinvest it, they just pay it out.
So, if all you are looking for is compounding, that is it. It will not matter the vehicle that you use to get it, because the account TYPE itself does not determine the allowing of compounding or not.
2007-01-03 08:20:44 · answer #3 · answered by ricks 5 · 0⤊ 0⤋
There should be no compounding in a 401k/Ira as there should be no cds or other bank instruments. ADX PEO EWA EFA. Invest & you will make money.
2007-01-03 10:19:42 · answer #4 · answered by vegas_iwish 5 · 0⤊ 0⤋