4 Misunderstood Facts Every IRA Investor Must Know
For retirement savers, an individual retirement account (IRA) is a must-know vehicle in all of its forms. An IRA can come in either pre-tax or post-tax variety, and may or may not be connected with your current employment status. Below, you'll find four misunderstood facts of IRA investing that may help you as 2020 mercifully comes to a close.
When investors say that they "invest in an IRA," what they really mean is that they hold investments within an IRA. An IRA is not an investment in itself but rather merely an account type with a name reflective of its tax treatment. Knowing this difference reveals a higher level of understanding when it comes to retirement account mechanics and can prevent you from letting some financial salespeople convince you that an IRA has to be invested in a particular type of investment.
Depending on the specific investments held within, your IRA may have outperformed or underperformed someone else's IRA over a particular time period -- even if both are held at the same financial institution. To avoid confusion, it's important to keep language consistent when referring to these accounts and their underlying investments.
Source Fool.com
