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Retirement planning requires solid information so you can make the best decision for your future. Understand the difference between a traditional IRA and a Roth IRA in order to choose the best way to grow your money and save for retirement. David Moore with IRA Advantage gives you the insight you need.
Traditional IRA vs. Roth IRA
A Roth IRA is the taxed money that grows tax-free. The benefit of a Roth IRA is if you’ve got something that’s going to have tremendous growth.
For example: one of the custodians in the business talks about a situation where they had a young investor with a $10,000 Roth, and they started a tech company and sold the thing for $1 billion. Whether that’s true or not, it’s sure a great story.
A traditional IRA is pretax money, growing tax deferred. You’re going to pay normal income tax on distributions at the end of the day.
Think about this: With a traditional IRA, you’ve got the benefit of tax deferral and you’re going to keep that capital intact, growing tax deferred. So its pretax money, growing tax deferred. A Roth IRA is going to be that taxed money that grows totally tax free.
Let’s say you have an explosive investment. It would sure be nice to have it owned by a Roth IRA. But if you’ve got something where you’re getting started and you want to keep that principal intact to make the thing grow, you’re probably going to look at a traditional IRA just to make those initial investments and get some capital built up in there so you’ve got more to use.
The difference is, in a nutshell: a traditional IRA is pretax money, growing tax deferred, and a Roth IRA is taxed money growing tax free.
Truly understanding what your retirement options are takes the help of an expert. A simple call to IRA Advantage will get you the advice you need about a traditional and a Roth IRA. Give us a call today, 503-619-0223.