What would be better for me, a traditional IRA or a 401K?

Question

I am 23 and have been in the military for about 3 years. I have had a small amount of money invested in an ING account from a job that I left about five years ago. I would like to finally do something with it and am debating between a traditional IRA from ING, or a 401K. I am a total novice when it comes to investing and would like some advice from someone who knows what they are talking about. What would be better for me at this point to put the money in so I can add more in each month.
Thanks in advance.

Answer 1

Do not debate between them, try to do both, as they are equally compelling ways to save in a tax-advantaged way.
The main difference is in size, with 401K plan typically allowing you up to $15K in income-tax free savings, and an IRA with up to $4K in income-tax free savings. Both of those amounts are going up in the coming years so you can save more in future years.
The 401K you set up through your employer and can be contributed to in small amounts taken out of your paycheck. Investment choices are generally made available by your employer.
The IRA you contribute to on your own (through ING or another financial institution) and you often will have a wider range of investment choices.

Remember, its not either/or with the IRA vs. 401K, it's BOTH.

Answer 2

Your best investment is to pay off your credit cards.

Your second best investment is a Roth IRA. Unlike traditional IRA's, contributions to a Roth IRA are not tax deductible. But unlike traditional IRA's when you make withdrawals after age 59 1/2, you are NOT taxed! It's better to be taxed now than when you retire, because when you retire, you can have a lot of money.

You can open a Roth IRA ant any financial institution. I recommend Scottrade.com because their fee for buying a stock is only $7.

Answer 3

You need to prioritize your retirement investments in this order:

1) Free money
2) Tax-free money
3) Pre-tax tax deferred
4) Post-tax tax deferred

Your free money comes from your employer's matching contribution into your 401(k). Contribute only to the level that you maximize that match.

Then, assuming you are eligible, contribute up to the maximum into a Roth IRA. This is your tax-free component.

Next, increase your 401(k) contribution.

There are lots of non-traditional options that can help you make the best of your retirement savings. Consult with a qualified financial advisor to devise an optimum financial strategy.

Answer 4

A 401(k) is company sponsored and usually has a match ("free" money) up to a certain percentage. You also get a nice tax benefit.

An IRA is something you set up yourself.

Answer 5

check into U.S savings bonds they can be a good investment

Answer 6

401k