How to Invest

The educational content on this page serves informational purposes for investing. Money Off My Mind does not provide advisory or brokerage services and does not endorse or counsel investors on specific purchases or sales of stocks, securities, or other investment instruments. See our complete financial disclaimer.

Brokerage accounts

Flexibility in investment choices

Standard brokerage accounts tend to feature a broader range of investment offerings compared to tax-advantaged accounts.
These options include stocks, bonds, mutual funds, ETFs and even advanced instruments like options and futures.

No restrictions on investment types

While retirement or educational savings accounts might place limitations on which investments you may select, brokerage accounts tend to not restrict investors to specific asset classes.

Withdraw at any time

Unlike specialized investment accounts, funds may be withdrawn from brokerage accounts at any time without fees or penalties, though you may owe taxes on capital gains.

Individual retirement accounts (IRAs)

Tax advantages

Contributions to traditional IRAs can be deducted from your taxable income, which could potentially lower your overall tax liability during the contribution year.
Roth IRAs conversely offer 100% tax-free growth and withdrawals on post-tax dollars, meaning you could save on withdrawals in retirement.

Compounding interest

Since the investment horizon for and IRA is typically decades out, your investments have the opportunity to maximize compounding interest without being bogged down by annual taxes.

Long-term incentives

IRAs encourage individuals to keep their money invested with early withdrawal penalties if the funds are used prior to retirement age (typically 59½).

Employer-sponsored retirement accounts

Employer matching

Arguably the biggest benefit, many employers offer a percentage match on contributions employees make to their retirement accounts. This is actually free money given that you contribute at least the match amount.

Higher contribution limits

Employer-sponsored plans, like 401(k) accounts, tend to have significantly higher contribution limits as compared to IRAs. This allows employees to save a greater portion of their income in a tax-advantaged manner.

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