There’s a lot to keep track of in this wide world of ours, and most people’s eyes glaze over at the mention of “IRAs.” While it’s understandable that financial mumbo-jumbo may not capture the attention of many Americans, there’s one thing we can all agree on: we’ll all want to retire at some point. Here are the top reasons to open an IRA account right now (spoiler alert: it’ll help you retire)!
While IRAs may sound technical and confusing, they allow you to invest your money the way you want to. A 401(k) generally comes with a limited selection of investment choices. An IRA, however, lets you pick from pretty much any stock, bond, or mutual fund that pops into your head.
What does this boil down to? An IRA allows you to make finances interesting. If you love Disney movies, you can put your money toward Disney stocks. If you’re a fan of sports shops, there are stocks for that, too!
No matter what you love, think about running your investment options by a professional financial planner. They can steer you toward companies with solid fundamentals that still meet your criteria.
Usually, you have to pay a capital gains tax when you make money from selling a stock. However, if you sell your investments in your IRA, there are no capital gains taxes—you can grow your investments free from tax!
Last but certainly not least, an IRA provides you with financial security for your retirement. Social Security payments only replace around 40 percent of an average worker’s normal income, and many financial planners suggest that you’ll need 70 to 90 percent of your pre-retirement income to keep up the same standard of living. A little extra security never hurt anyone.
Now that you know the top reasons to open an IRA account right now, consider a self-directed traditional IRA. It’s the most common type of IRA, and it works for most people—why not you, too?
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