IRA vs Roth IRA: Which Individual Retirement Account Should You Choose?

Updated : Sep 02, 2019 in Articles

IRA vs Roth IRA: Which Individual Retirement Account Should You Choose?


Justin Goodbread with Heritage Investors,
Financially Simple, here in the conference room. We have a hashtag behind us today. #pizzafinance. Yes, I’m using pizza. Sausage, pepperoni, mmm, this is gonna get
good. But I want to answer a question that I’m often
asked, and that is, “Justin, which is better? More specifically, whenever new investors
are starting to invest money for the first time, or whenever those inherit money for
the first time and they’ve really never dealt with this, they often say, “Justin, which
account is gonna return better for me, a Roth IRA or an IRA?” And that’s a really interesting question because
it’s kinda like these two pizzas. They’re the same. What do I mean by that? Well, the IRA is kinda like this big, thick,
almost like a deep dish pizza. A Roth IRA is kinda like a thin crust, alright. So a Roth IRA’s gonna grow tax free. What you have in the account is what you’re
gonna get. An IRA is gonna grow tax-deferred. It’s more like this thick crust because, before
you start to eat on it, the IRS is gonna take a little bit of it, so it appears a little
bit bigger than it is, but in reality, once taxes come into play, it’s not quite the same. Now I personally like the thin crust pizza. I gotta tell you. I like thin crust pizza, but what I’m getting
at on which one will return better is they both return the same. See, just like on this perfect piece of pizza
right here – thin crust, pepperoni and sausage and this thick crust pepperoni and sausage
– I could choose to put anchovies, green olives, black olives, mushrooms… No pineapples. Not allowed. No pineapples are allowed on my pizzas, folks. So it’s kinda like this. Inside a Roth IRA, I can buy ETFs. I can buy mutual funds. I can buy stocks, bonds. I can buy real estate with my Roth IRA. I can invest in business if it’s done properly
through a Roth IRA. Guess what? I can do the exact same thing in my IRA. I can buy ETFs, stocks, bonds, mutual funds,
real estate, and even invest in business. So the question is not which is/which one’s
gonna return better. It’s not a matter of the Roth IRA’s gonna
return more than the IRA. It’s which one specifically meets your retirement
goals. Do you really need a thin crust pizza, one
that what-you-see-is-what-you-get and grows tax free? Perhaps you need a little bit of tax deferral. Perhaps you need a little bit of tax deductions
now, and that’s where an IRA comes into play. Hey look, pizza finance today. You never knew that you could put pizza and
stocks and bonds and IRAs together, but I just did it. Here’s what I want you to do. If you think this is cool, if it makes sense
to you, do me a favor. Share this post. Hey, put a hashtag out there on Instagram,
FaceBook, Twitter, LinkedIn, wherever, and say, “Hey, I’m watching Justin do pizza finance.” Hashtag out some pizza finance. That’s my Justin Timberlake hashtag, right? Ya’ll have fun with this. So guys, that’s it for this pizza finance
episode. Justin Goodbread with Financially Simple. Like I say all the time: You know, life is
hard. It is. But life is good, and life can be complicated,
but money, pizza, it doesn’t have to be. Let’s continue to make our lives, at least,
financially simple. Hey, ya’ll go out and make it a great day.

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