How Traditional IRA Works

Video Transcript

"This is financial advisor Patrick Munro talking about how a traditional IRA works. Traditional IRA stands for traditional Individual Retirement Account and it's a great saving vehicle for the American tax payer to get involved with, especially when they're at work. What an individual can do is put money away in this retirement vehicle while they're working. They receive a full benefit of not having to pay taxes while this money accumulates, so therefore, when you're not having to pay taxes on the investment, it grows even larger quicker. The key, though, is to make sure that your money inside the investment is safe from risk. It depends on what you're investing in, you want to be sure you stay away from risky investments such as stocks and mutual funds. Many of them are subject to spikes in the downside when markets get very difficult out there. So, as you're younger, you can have more risk, but as you get older in life, in your traditional IRA, you want to make sure you position your assets to avoid the risks that could happen going forward. This is financial adviser Patrick Munro talking about traditional IRAs."