Is it better to put money into a mutual fund or roth IRA?

Answer 1

You don't understand a Roth IRA or you would not have asked this question this way. A Roth IRA is a tax vehicle.... which can be a bond, a stock, or perhaps even a mutual fund (I am not sure a Roth can be a mutual fund, but I know it can be a stock or a bond). A Roth IRA is not deductible from you taxable income, but the interest that it earns is not taxable as long as you don't draw it out before you are 59.5 yrs old, with some exceptions....

So, it is better for young people and most middle aged people to put their money in a Roth IRA rather than a traditional IRA. I would invest in preferred stock, not common stock, or a safer bond or even a CD. You can buy QQQ stock which is very much like a mutual fund, but you only have to pay to "buy" and pay to "sell" so you are not out all the annual fees that mutual funds like to charge you...... bottom line, put as much money as possible into Roth IRAs, and buy QQQ stock. It performs in concert with the overall stock market and you will not have to pay annual fees. Good luck. (another tip: earn interest, don't pay it).

Answer 2

All things equal, it's better to put money in an IRA until you max it out (unless you have a 401k plan where your company matches your contribution; in that case you should contribute enough there to get the max and THEN max your roth IRA). Then you should go back and max your 401k and only THEN should you channel extra money into regular old mutual funds.

Of course you may want to save for things other than retirement, like a house, car or vacation. So stash some cash in a money market every month too.

PS-actually you can take your principal (contributions but not earned interest) out of an IRA at any time, not just for education, etc. You can take out the entire amount for your first home, tuition, disability, etc.

Answer 3

Both of the previous answers are great. I would like to add though, that if you are young, diversify. Definitely do the Roth IRA thing, but if you are looking to invest for future plans (ie business), get a mutual fund as well. I have 3 and am working on starting my Roth IRA. When i get out of the military, i will want to start/buy my own business. If I just had an IRA, i would take a huge hit in penalties for taking from it.

One more thing. The IRA DOES allow you to take out early for certain "lifetime achievements" like Education and your first house. I would do some research to weigh out the benefits that best suit you. Good luck

Answer 4

"Democracy" is right on !!

In even more simple words, an IRA is merely a bucket in which you fill up with something. A mutual fund is one of those somethings you could PUT IN an IRA.

Throughout life you want to add to your bucket, as much as possible so at retirement age you have enough money to live off the interest and live well.

A ROTH is simply and IRA that you contribute to with money you already paid tax on. You can touch it when ever you want (which is bad for those who can;t leave things alone to grow!!!) and ONLY the interest made on it is taxed when you withdraw it.

Other IRA's give you a tax benefit NOW by contributing to them with before tax money but will be taxed later in life when you are ready to take it out and at that time the tax brackets may have increased. Either way, saving & investing is the best thing for you do no matter which IRA you choose. DO IT and add to it often. ONLY YOU can make your financial future a bright one !!!

: )

Answer 5

A rollover IRA is almost a non everlasting parked account into it incredibly is transfered into yet another 401k or you are able to merely bypass away it there.... a roth is a private IRA account that's tax defered... with the two account you are able to placed funds into something you like including mutual funds, shares, bonds, funds marketplace, cds, et cetera

Answer 6

Democracy..just to clarify..the QQQQ(orQQQ as you had written) is an exchange traded fund(ETF) that tracks the Nasdaq 100(largest companies traded on the NASDAQ stock exchange). It does not track the overall stock market. The SPY, an ETF also, tracks the S&P 500. It comes much closer to tracking the overall market. Just for clarification.