If you are planning to have a secure retired life you need to start planning very early. Retirement planning basically means to save money and to gain interest on the same. For example if you create an account solely for use after your retirement, you can count on the interest of this account to live out your old age. These accounts are generally called Individual Retirement Accounts. IRAs are of many types.
The main two types are the traditional IRA and the Roth IRA. The main difference between these two is that while traditional IRA is tax deductible, Roth IRA is not. Once you have a traditional IRA and you have made contributions to it, when you want to withdraw from this account, there will be some additional charges on account of penalty. If we take the case of Roth IRA, you can withdraw from it without any penalty charges. In traditional IRA, the investment options might be few as there are many restrictions about it. But in Roth, you have plenty of options.
An IRA can be set up at any financial institution, preferably a bank or a brokerage firm. When you set up your account at a bank, the bank becomes the trustee of your account. There are certain things that you should know to recognize a good trustee.
Fees- go for a company that offers low account fees and low commission. This is important because if the company you have taken as trustees is taking a large percentage of what you put in your IRA, what is the use of it all? So choose one that offers affordable fees.
Minimum balance- you have to choose a company that offers a plan which minimum balance is what you can afford. You may have low funds to start an account, so you have to go for a plan that you can start with the funds you have in hand.
Investment opportunities- choose a company that has few restrictions over the kind of investments you can take on. Of course this absolutely depends on what you are planning to invest on and how risky can you afford to be. Risky investments are okay, but the threat of losing your money always flies around.
Automatic contributions- this makes it convenient for you to regularly deposit an amount into your IRA. You do not have to remember and make a deposit, but just fix it so that you can automatically make payments to your IRA from a linked bank account of yours.
If you find a plan offered by a company that has all of the above characters, look no further, dive in and open an account there.
Just everyone body can not open a Roth IRA account, there certain conditions that you must meet to open an account. It is your job to find out whenever you are eligible or not, no bank will find out for you. So, gather information about your income and find out if you are eligible first. Every IRA has certain norms and eligibility conditions.
It is necessary that you know everything about the kind of plan you are taking and the firm you are taking up and any other details about your options. Invest in the right areas and you will have an assured holiday ahead of you right from day of your retirement.