There is a reason that employers offer their workers 401ks, they work great and can help you save money for retirement. If you can't invest into a 401k or want to invest some additional money on top of it you can also invest into something called an IRA. Together they make a great combination that can lead to a great future.
If your employer offers you a 401k plan you can choose to have some of your money taken out of your paycheck each and every month and invested into your 401k. This money will be taken out of your pay before that money can even be taxed.
After the money is in the plan you can invest it into things like stocks and bonds in order to help it start appreciating and working for you. The best part about this plan is that the interest you make on the money is not taxed until you withdraw the money.
You do have to pay taxes once you take the money out, so it is not completely tax free. But because you got so many tax breaks early on you still come out way ahead due to compound interest. 401Ks really are helpful to the large majority of Americans. If you want to learn some more 401k info on your specific plan you can contact your company's human resources department.
A Roth IRA is another retirement plan that works very well and can be used in combination with a 401k. Individuals have to set up a Roth IRA plan themselves, rather than just going through a third party. There are plenty of articles on the net about how to set up your own Roth IRA, just do a search or contact a financial institution that offers a plan.
Investments in a Roth IRA can grow tax free just like investments in a 401k. However, the Roth IRA works a little differently when it comes to contributions.
With Roth IRAs the individual pays taxes on the money before it is invested. But as long as they follow the Roth IRA withdrawal rules when the money is taken out there are no taxes to be paid. This includes the interest that was made on the money. So in a sense it is really tax free money.
Investing money into both plans can really help you get more from your money. The 401k can help lower the amount of taxes you have to pay today, while the Roth IRA can give you a tax break for your future.
More Information:
For more information on investment plans here is some 401k Information
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Article: Having A 401k And A Roth IRA Author: Shaun Rosenberg Publication Date: 2010-12-13 Total Views: 184 Word Count: 431 Category:Home /
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