So I have been meaning to make this video for awhile, and I was glad to finally get it finished. I will let the video do most of the explaining, but it is a quick illustration of how investing in retirement accounts, such as traditional IRAs and 401ks, give you a nice little tax break.
For the longest time, I was always told that you should invest in a retirement account for the tax deferment aspect of it. Every time I heard it, I was trying to figure out what that meant. Then, when I was faced with the decision of how to invest my hard earned money, I started doing some research, and I finally discovered what the advantages were of investing in a 401k and/or traditional IRA.
Now, I am not going to go into what the specifics of each type of retirement account offers in this post. In the future, yes I will. The point of this post is to give you a visual illustration of what a tax deferment really means.
Ok guys, I think that is about it for now. Until next time.
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December 14, 2009 at 12:23 am
stephanie galloway
My parents have already invested in IRA’s.That’s interesting about that.Thank you so much for sharing that my friend.
Stephanie
December 26, 2009 at 6:10 pm
Maria
Will you have to pay taxes on that money when you withdraw it during retirement?
January 21, 2010 at 6:54 am
Dr. Tim
If you are investing in a 401K or Traditional IRA, the answer is “yes”, you will have to pay taxes on it when you take it out. However, the good thing is that you can put up to $16,500 per year in a 401K (which means a lot of money into the pot per year) so that it can grow really fast. The other alternative is a Roth IRA, in which you get taxed up front when you put your money into the account. But the cool thing with that…is when you decided to use it, you don’t have to pay taxes on it. You just enjoy a big pot of money
. I hope this helps.
January 22, 2010 at 2:11 am