What is an IRA and why open one??

We all work today and set aside money on the side para by the time we retire we have the money to support us. Maliban sa pension, ang 401k, 403b, TSP are retirement vehicle Kung saan nagcocontribute Tayo out from paycheck for retirement. We own a little piece of the company and thus, the money is invested. I won't go into details on the differences of the three pero Ang max contribution annually is $19500 currently.

So ano ang IRA? Ang IRA is actually an account Kung saan you can put money voluntarily, with a max contribution of $6000 a year. 

You may have heard Roth IRA vs IRA (or traditional IRA). Ang difference is timing of being taxed. Sa ROTH IRA, you are being taxed Everytime you contribute so that by the time you withdraw, Hindi ka na matataxan. Ang IRA or traditional IRA is getting taxed when you withdraw. 

Walang age limit Ang ROTH IRA pero may income restriction and vice versa sa traditional IRA. So while you are not on that income bracket or age restriction, go ahead and maximize your contribution

So what works best for you? Depende Yan sayo at sa mga plans mo for the future. But think of it this way, usually the higher income bracket ka, the higher you get taxed. So by the time you withdraw the money, saan bracket ka? So think about it and decide which suits you best.

Now, paano Ito makakatulong sa retirement if account Lang siya. Ito Ang kahalagan ng pag open ng IRA account- you can build wealth thru linking it to the stock market. There are different kinds of stocks pero I won't go into detail here. Pero investing the money through stocks is better than keeping cash Kasi ang cash nagdedepreciate ang value. Stocks on the other hand, appreciates over the long run. Just be careful Kung among klaseng stocks bibilhin mo.

Now, the earlier you open an account and invest, the more you will gain because of compounding interest. So yeah, that's the very reason you should open an IRA account - to make money work for you.

Now contributing to a 401k at the same time with an IRA might be hard pero you don't have to maximize it right away. Contributing on it is still better than keeping the cash. Now if sobra sobra ang natitira sayo monthly, then look for other way of where to put the money -- real estate or business!

So don't settle on contributing sa 401k/tsp/403b if may extra cash na natitira monthly. Contribute it to an IRA.