A 401(k) allows for more money to be contributed each year on a pretax basis versus an IRA, which usually requires higher annual contributions.
While traditional IRAs may be your best choice if you’re investing for retirement, if you’re already working, you can save and contribute to a 401(k) instead.
The main reasons to invest in a 401(k) instead of an IRA include the fact that you can create an account tax-deferred meaning it won’t be tax-deductible until you withdraw and that you can put money into it tax-free.
Plus, you’ll have more flexibility. You can take money out of a 401(k) and use it for non-retirement purposes, such as paying down debt, or use it for retirement.
Once you decide to participate in a 401(k) instead of an IRA, you’ll have to decide whether you want to put money in the plan to build it up over time.
If you’re looking to invest for long-term growth, you should be selecting funds that are a good match for your needs.
Let’s look at some of the pros and cons of a 401(k) vs. an IRA when it comes to building a nest egg:
Drawbacks of 401(k)s
While you may be able to save more in a 401(k) than you would in an IRA, your investment options will be limited.
You can’t put your money in more aggressive funds and your employer will only match your contributions up to 5% so it’s important to think long-term about the funds you invest in.
And if you make lump-sum contributions, you have to pay taxes on the earnings over time.
This may not be a big deal for you if you’re lucky enough to have a 401(k) at work, but if you don’t, this could present a problem.
At a 5% match, the typical employer match on a 30-year, 6% return is about $20,000. If you were to contribute the maximum to a Roth IRA and hold it until age 59 1/2, the tax bill on this contribution would be closer to $3,000.
Picking funds is also more difficult in a 401(k). You might be able to find funds in a 401(k) that have a lower expense ratio than you’re used to with an IRA, but that doesn’t necessarily mean it’ll be an easier choice to invest in.
For example, the Vanguard FTSE Total Bond Market ETF (VBM) has a $26 expense ratio, but you won’t get the same 15% return on your money in that fund as you will in a traditional IRA with the same expense ratio.
And many of the funds you can invest in at a 401(k) are not high-quality. For example, a 25% ETF is generally not a good match for the safe-haven investment of owning a diversified collection of bonds, and the Vanguard Total International Stock Market ETF (VWO) is simply a collection of international stocks.
Choosing the right retirement fund can be more difficult if you’re joining an employer-sponsored plan, but that’s not always the case. If you think you still need more professional advice, then you can look here for more info.
Published: August 15, 2017, 23:11 | Comments Off on
Category: Private Label Rights
A marketer friend of mine is retiring from Internet Marketing!
He has opened up a line of successful offline stores and
is devoting his attention to them fulltime!
As you’ll see in the video, this guy has been a very
successful Internet marketer.
He’s decided to move on to new ventures, but he’s turned
his retirement into a huge opportunity for YOU!
In other words, his retirement is your lucky day!
To understand what I mean, you really just need to see this:
Whether you’re looking to start a new business or expand
your existing online business, this is a great chance to cash
in on a great opportunity.
This is for sure the biggest… baddest… Firesale I have ever seen
or promoted EVER!!!!
I recommend grabbing it before it ends!
To your success,
Micheal & Yvonne Savoie
Published: October 24, 2015, 12:33 | Comments Off on Retirement Firesale Gives You Rights To Hot IM Products!
Category: Internet Marketing
Needless to say, it takes something special to REALLY get my attention any more.
So today I want to tell you about a CRAZY 7-day firesale that will shock you even if you’re a jaded internet marketer 😉
It blew me away, and that’s why I wanted to share it with you.
Check out this short video, and you’ll be shocked when you see it:
On a scale of 1 to 10, with 1 being perfectly normal and 10 being certifiably insane, this deal is an 11!
These guys are really off their rockers.
They explain their reasoning in the video… and it does seem to make sense… but I still have to wonder.
Nevertheless, their crazy decision is YOUR gain!
I recommend going to this site and “ripping off” this amazing package before they change their minds:
This page is going to be taken OFFLINE in 7 days (or sooner if they come to their senses), so be sure to check it out right away!
This would be a great way for you to start a new business or expand your existing online business.
To your success,
Micheal & Yvonne
Published: September 21, 2015, 11:34 | Comments Off on Crazy Firesale Puts Massive Earning Power In Your Corner!