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Some Key Differences Between IRA and 401(K) Accounts

Some Key Differences Between IRA and 401(K) Accounts

Planning for retirement is a very crucial thing. It’s a decision that all of us will have to make at some point, however, people don’t talk about that enough.[1] Pensions are becoming non-existent. Those who are receiving them are most likely to be our grandparents. They’re guaranteed a certain amount of money from their retirement day through the remaining years of their lives. Unfortunately for our generation, we won’t be benefiting from such a privilege.

Therefore, it becomes even more important for us to start thinking and start planning for our retirement.

When we talk about retirement, there are usually two popular options that come to mind. The first one and the most recognized one is the 401(K). The second one is the Individual Retirement Account, or IRA.

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Although IRA and 401(K) accounts are the two most common contribution plans to retirement, they both do have their differences. One might be the right fit for you, while the other is way off base for what you need. Surprisingly, some people manage to have both of them.

What you should know about an IRA account

An Individual Retirement Account, or an IRA, gives anyone the opportunity to contribute to their retirement. You’ll have to be under the age of 70 in order to be qualified.

One thing I like about IRA is that you can own Gold as your asset. Yes, I mean it. You can literally own gold and other precious metals. However, you’ll need to conduct your research in order to pick the best gold IRA companies.[2]

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It’s also safer when you invest your money into gold IRA companies because no manipulations can be done, which is different from what you would expect from some other avenues of investing. Another thing to note is that your asset will not be taxed until you decide to withdraw.

For the year 2017, your traditional and Roth IRA contributions can’t exceed $5,500 ($6,500 if you’re 50 years of age or older). However, this limit doesn’t apply to rollover contributions.[3]

What about 401(K) accounts?

401(K) accounts can be opened through employers only. There’s a qualification requirement that needs to be fulfilled in order to be considered. Some employers may not offer this retirement plan, though and if yours doesn’t, you can always do a Roth IRA.

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Many employers tend to offer matching contribution when you open a 401(K). For example, if your employer would match your account contributions up to seven percent of your income, you should never contribute less than seven percent yourself. If you do contribute less than that, then you would be turning down some free money, which you wouldn’t want to do.

Which one would be my pick if I were to start now?

As someone who’s very cautious, I always ensure that anything I’m about to get involved in is safe, reliable, and beneficial to me. I don’t like to waste my money on things that don’t have any value.

In the case of 401(K) and IRA accounts, I’d go with IRA because it gives you more freedom while allowing you to also save more money from it. If you choose to invest in gold companies, that’s even better for you, as they’re more secured.

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To conclude

We all will want to retire one day, but unfortunately, some of us may have to work for some additional years, or even for a lifetime period. That’s why it’s very important that you start thinking about your retirement plans as early on in your life as you can.

You don’t want to be in your 70s and still have to wake up every morning to go punch in. Instead, you should be looking forward to traveling the world when you reach your retirement age. Take control of your future now and start planning for your retirement. You’ll be very happy when the day comes.

Featured photo credit: Dr. Larry Anderson via impowerage.com

Reference

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Last Updated on June 25, 2019

5 Books You Must Read if You Want to Be a Millionaire in Your 20’s

5 Books You Must Read if You Want to Be a Millionaire in Your 20’s

Millionaires and billionaires read more than you think. In fact, the likes of Warren Buffet are said to read 1.000 pages a day. As the old saying goes “There’s no smoke without fire”; so, start off with these 5 incredible books!

1. The 48 Laws of Power

48-laws-of-power

    “If you are unsure of a course of action, do not attempt it. Your doubts and hesitations will infect your execution. Timidity is dangerous: Better to enter with boldness. Any mistakes you commit through audacity are easily corrected with more audacity. Everyone admires the bold; no one honors the timid.”

    On your journey to becoming a millionaire in your 20’s, there will be many people trying to manipulate you into doing what they want. This international bestseller by Robert Greene is the widely read by those in the entertainment industry because of its dog-eat-dog environment. This book is a must-read for anybody who wants to claim power and keep it. it’s a fun read that tells the story of some of the most powerful people in history.

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    An example of a law of power is: Always say less than necessary.

    • When trying to impress, the more you say the more common you look and less in control.
    • Be vague.
    • Powerful people impress and intimidate by saying less.

    2. Influence: The Psychology of Persuasion

    influence-the-psychology-of-persuasion

      “Often we don’t realize that our attitude toward something has been influenced by the number of times we have been exposed to it in the past.”

      This book explains the core strategies people use to influence others using real world examples. Robert Cialdini’s book goes over human quirks like the need to be consistent, and how you can use that in your marketing strategy to make more money. “People’s ability to understand the factors that affect their behaviour is surprisingly poor,” Cialdini says, “which leads to people making poor decisions without realising why.”

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      Cialdini includes real world examples of why people join cults, buy certain jewellery, or give to charity.

      3. Blue Ocean Strategy

      blue-ocean-strategy

        “Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space. Value innovation places equal emphasis on value.”

        This book argues that leading companies don’t succeed by battling competitors in “Red Oceans”, but by creating “Blue Oceans” where they have uncontested market space to grow. It goes over case studies like “Cirque Du Soleil” who created a blue ocean by creating a circus platform that didn’t include animals or more than one act on at once but instead, decided to focus on talented performers and music who created a mystical storyline.

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        4. The Fountainhead

        the-fountainhead

          “A man’s spirit is himself. That entity which is his consciousness. To think, to feel, to judge, to act are functions of the ego.”

          The Fountainhead takes place in the United States, mostly in New York City, during the 1920s and 1930s. Billionaire Mark Cuban named his yacht “Fountainhead” after this book. This classic novel is about the struggles of an innovative architect named Howard Roark and his effort to achieve success on his own terms. Many entrepreneurs are inspired by this book because it depicts how you should be uncompromising when it comes to your vision and your goals. If you follow this way of life, you develop the ability to change the world and creating something unique.

          5. The Compound Effect

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          the-compound-effect

            “Do you know how the casinos make so much money in Vegas? Because they track every table, every winner, every hour. Why do Olympic trainers get paid top dollar? Because they track every workout, every calorie, and every micronutrient for their athletes. All winners are trackers.”

            This book is by Darren Hardy the CEO of Success Magazine, he goes over how it’s the small, seemingly insignificant choices that compound to create success or failure over time. No one has a plan to be broke and fat but that’s what happens when you don’t have a plan and go along the path of least resistance. Hardy argues that you cannot improve something until you measure it and to always take 100 percent responsibility for everything that happens to you.

            So, those are five books you must read if you want to give it a try to become a millionaire in your 20’s. What are the best books you have ever read? Leave a comment and share these life-changing books with your friends to help them become successful like you.

            Featured photo credit: Bill Gates Foundation via businessinsider.com

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