Are IRAs and 401Ks A Good Investment

Are IRAs and 401Ks A Good Investment

Typically, yes. It’s always worth investing in one’s self.

401K vehicles are controlled by the employer, who matches the investment typically 1:1 for the first 3% and then 1:2 for the next 2%. This is like getting paid an extra 4% on top of the investment accounts own earnings. In total, this will lock 5% of one’s income until ~60 years of age, unless one is willing to accept the unavoidable early withdrawal penalties to access those funds sooner. While 401Ks may have 20-30 different options, there are 20,000+ options when it comes to IRAs.

IRA vehicles are an individual retirement accounts with the most common being a Roth IRA which allows the payment of taxes now, for future tax free growth. A traditional IRAs will defer these taxes for later and is the most used type of IRA by our students due to the ability to avoid most of these taxes.

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