Individual Retirement Accounts

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One can contribute up to a maximum of $2,000 a year of ones earnings ($4,000 for married couples). For example, according to Heady: if one were to save $2000 dollars a year at 6% for 30 years under the terms of a regular savings account, the total earnings would be approximately $120,900 after paying taxes; however, if one were to shelter $2000 a year at 6% in an Individual Retirement Account that amount would increase by $48,000 dollars to a total of $168,000 because of the tax-deferred feature (60). Using this example, the tax-deferred feature of an IRA is easily recognized as having a considerable edge over regular savings plans.
Yet there is even something better that an original IRA, it is call the Roth IRA. This tax-free, self-directed Individual Retirement Account fund was established by Senator Bill Roth and put in existence January 1, 1998. In a Self-Directed IRA the account holder is the one chooses the products to invest in, rather than the banks, insurance companies, or stockbrokerage houses of an Original IRA (“Self-Directed IRA”).
Another advantage to consider when planning an IRA or Roth IRA is to start the account as early in life as possible. It is obviously an advantage to use the program that is going to give the best overall return; however, the advantage of starting early should not be taken lightly either. As with all savings plans, a key factor in the final results is the overall length o...