Wednesday, January 28, 2009

Invest in a Roth IRA

By Jennifer Ng

According to the IRA (, an Individual Retirement Account (IRA) is “a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes.” You invest money in an IRA and the purpose of this is to help you get ready for your own retirement. However it can be quite difficult to choose best IRA to fit you. According to, we should choose from Roth, deductible or nondeductible flavors. Their favorite flavor is the Roth because Roth withdrawals after age 59 ½ are generally not taxed. The traditional IRA is both tax-deductible and non-deductible. Both these IRAs allow savers to collect more money than tax-deductible IRAs. The Roth IRA, in addition though, has flexible withdrawal rules. You can withdraw for any reason without any penalty. Another article from also mentions the advantages of investing in a Roth IRA. They state, “If a 25-year-old contributes $5,000 each year until she retires and makes an average annual return of 8% on her investment, she'll have $1.4 million saved by the time she retires at age 65. And the money is all hers -- she won't have to give the IRS a cent of it if she waits until retirement to cash out.” Investing in a Roth IRA at a young age will definitely pay off in the future.


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