What Is an IRA Account?

Series Summary

Personal finance is the application of financial principles to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, while taking various financial risks and future life events into account. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management. In this free video series on investing, learn about the stock market from a futures and options floor trader. First, learn about investing in precious metals, gold futures and gold mining. Next, he discusses investing in nanotechnology, trading stocks and trading stocks online. Finally, discover what a stop order is in investing and about the London Stock Exchange.

Video Transcript

"Hello my name is Mark Griffith. And this is a brief introduction to IRA accounts. What are they. This is specific to the United States and if you don't have what Americans call a 401K retirement plan you can still have an IRA account. IRA stands for Individual Retirement Account. IRA accounts fall into two types; the traditional type and the Roth type. With the traditional type you don't pay tax on the way in but you do pay tax on the way out. And the Roth type you do pay tax on the way in, you don't pay tax on the way out. In other words with a Roth account you pay tax on the income that you put into the account but the income you get out of the account is tax free. This is obviously better for people who think they're going to be in the higher income bracket when they retire. You could only invest IRA accounts up to the age of 70 1/2. Seventy and six months. And you'll find that there are restrictions on how much money you can pay into the account. That's $5,000.00 a year unless you're over 50 when the maximum goes up to $6,000.00 a year. You can do this through mutual funds, brokerages or your bank. And you'll find that there are different terms, there are different costs and you should compare what they will do. If you go to a brokerage house you've got the most responsibility, reverse cycle and most responsibility for making money but be careful this is for people who are experienced in investing. With mutual funds you should compare the different fund managers. See what their track records are and see what they're charging you. Cheaper isn't always better. Sometimes if you pay more you get more, but not always. And with banks this is usually the simplest way of doing it. But, of course again, not always the best. So plan how much you're going to pay in. Plan what kind of IRS account its going to be. And consider again, consider what your goals are once you retire, once you get started withdrawing money from it. So be careful. Do your homework and good luck."