Ira Advantages And Disadvantages

The IRA advantages and disadvantages really come down to one major factor

, control over your account. There are other things to consider of course but it is the thing that sets these plans apart from other types of retirement accounts.

An independent retirement account is set up, as the name suggests, independently. You find a company to set up your account with, and decide on what type (most commonly a traditional or Roth) of account you want. You pick all of your investments (stocks, bonds, etc) on your own (or with the help of a financial adviser).

This level of control over your IRA can be both an advantage or disadvantage depending on your outlook. A lot of people like picking each of their investments because they like having detailed control over their investments and enjoy trying to find the best strategies possible. This is not for everyone, however, and everyone needs to save for retirement.

With a 401k, for instance, your employer will set up a couple of different plans for you with varying levels of risk for you to choose from, making the choice over how to invest much simpler (but with a lot less options and control). Another option if you dislike this level of control is to consult a financial adviser for your investment options to help narrow down some choices and get some advice on how to move forward.

The other major thing to consider, which is definitely a negative aspect if you're planning on making an independent retirement account a large part of your savings plan, is the fact that these accounts have lower maximum contribution limits in comparison with other options, in fact their limit is less than 1/3 of that for a 401k.

With all of this to take into consideration it can be hard to make a decision on how to invest. The easiest way to decide is what feels right to you--don't let the fear of investing wrong to scare you away from saving at all--the most important thing is that you save for retirement, no matter how you do it. The IRA advantages and disadvantages are really just about control, so decide what makes sense to you and go from there.

by: Jennifer Quilter

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