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September 20, 2022

Greg Bolan Discusses Reasons Military Veterans Should Focus Civilian Careers in Finance

Greg Bolan is a army veteran who served in the United States Military. Now operating in corporate finance, Greg Bolan understands how serving in the army can put together service users for the following chapter of lifetime, with management skills, self-self-discipline, and strategic imagining skills. In the subsequent short article, Mr. Bolan discusses under the numerous causes why armed service veterans really should consider a vocation in finance in their publish military life.

Just after retiring from the navy, a lot of veterans question irrespective of whether their expertise can be tailored and used to the civilian earth. But, what they from time to time ignore is that they have a wealth of information in logistics and analysis. Even though it may not be for everybody, Greg Bolan says that a vocation in finance might be a excellent choice for veterans who want to use their analytic and strategic pondering expertise in a new marketplace.

The transition out of the armed forces can from time to time be complicated and perplexing but by concentrating on a career in finance, veterans can very easily assimilate into the civilian globe. Their track record in the military services generally offers a powerful basis of expertise that they can then apply to a successful and profitable new life path.

Previous Armed forces Users are Trained in Self-Self-control and Leadership Competencies

When new recruits 1st enlist in the military, they commit the initially couple months in basic instruction studying necessary expertise desired to do well within the army. These techniques involve self-discipline, bodily conditioning, management abilities, and specialized navy instruction. Right after finishing primary coaching, they’re predicted to sustain these techniques on their possess, strengthening a society of self-handle explains Greg Bolan.

Lots of veterans worry that these abilities may perhaps make them much too rigid for the civilian entire world nevertheless, in the finance sector, self-discipline and leadership expertise are remarkably valued states Greg Bolan. Right after all, finance can speedily turn out to be a higher-tension atmosphere, requiring a cool head and mindful steering to bring a workforce towards accomplishment.

Furthermore, the military services also instills a feeling of teamwork in its members. In the finance sector, this teamwork is necessary for results. Mainly because the market is so quick-paced and ever-changing, these who can operate with each other quickly and competently are really sought-just after.

Both Finance and the Military services Call for Strategic and Analytic Thinkers

The army is all about organizing and strategy. Greg Bolan describes that armed forces users are generally tasked with creating brief decisions that could imply life or demise for on their own and their fellow soldiers. This variety of stress often involves break up-2nd strategic imagining and an potential to assess a scenario from all angles.

Despite the fact that the stakes are undeniably lessen, the finance field also necessitates its employees to be strategic thinkers. From investing to budgeting, individuals who perform in finance will have to be in a position to make audio conclusions based on details evaluation and an knowledge of the market. For veterans, this kind of pondering will likely appear in a natural way claims Greg Bolan.

Finance is a Dynamic and Worthwhile Career Selection

The finance sector is always modifying and evolving, offering those people who get the job done inside it a regular obstacle. For veterans who are utilized to the structure of the army, this dynamic natural environment may well be desirable. Furthermore, Greg Bolan claims that these who succeed in finance often come across them selves rewarded with high salaries and task security.

In contrast to other industries, finance is fairly steady, fulfilling veterans with a feeling of protection as they transition into the civilian world. This feeling of protection can make the transition a lot easier and deliver a sense of group that they might pass up soon after leaving the provider.

Attainable Problems Veterans May Face While Doing the job in the Finance Industry

Whilst working in finance might be a excellent fit for many veterans, they may face a couple of worries according to Greg Bolan. For instance, the field can be very aggressive, earning it difficult to get a foot in the doorway. Whilst most veterans experienced a designed-in local community of like-minded soldiers close to them 24/7, soon after leaving the provider, they’ll have to quickly construct a community to come across their spot within the industry.

Also, the finance sector is recognised for its extensive hours and significant anxiety amounts. Veterans who are used to a much more regimented life style may possibly discover the lengthy and variable several hours tricky to alter to. They’ll have to wake on their own up, get to get the job done, communicate, socialize, and adapt to ever-shifting requirements points out Greg Bolan.

Ultimately, veterans ought to master to assimilate to non-hierarchical job advancement. In the navy, it is quick to go up the ranks, but in finance, promotions are usually dependent on task general performance, not many years of service. This could be a tricky adjustment for veterans who are utilised to a a lot more rigid framework.

Ultimate Views

For a lot of veterans, a vocation in finance might be a good selection. Their military education normally supplies them with critical capabilities that are really valued in the industry, these kinds of as self-control, strategic considering, and leadership. Additionally, the finance business is constantly modifying, furnishing veterans with a continual challenge. Though there may be a handful of troubles, these as the extensive several hours and higher anxiety levels, the benefits frequently outweigh the problems.

August 12, 2022

3 Reasons Not to Put Money Into Your 401(k) | Personal Finance

(Christy Bieber)

If you have a 401(k) at work and your employer matches contributions, you need to lead more than enough to generate these matching money — you should not pass up on absolutely free money.

But at the time you have gained your match, continuing to place supplemental cash in your 401(k) may perhaps not be the proper move. In this article are a few motives you ought to think about other possibilities beyond this common retirement account.

Graphic supply: Getty Images.

1. HSAs can provide better tax breaks

After earning your employer match, you can change your emphasis to a wellness personal savings account (HSA) instead of a 401(k). You might be eligible for this kind of account if you have a qualifying large-deductible well being prepare.

Placing income into your HSA can be a much superior option than adding to a 401(k), simply because an HSA gives far better tax breaks. With a traditional 401(k), you get to contribute to your account with pre-tax dollars. But as a senior, you have to fork out taxes on your withdrawals. With an HSA, contributions are tax-cost-free, and withdrawals are also tax-free as extended as you use the revenue for qualifying clinical care.

Since health care is most likely to be 1 of your largest charges as a senior, conserving in an HSA lets you to address related payments with funds that you bought a tax break for on both finishes. And even if you never stop up using your HSA funds for healthcare, you get to withdraw from this account for any reason just after 65 and only shell out taxes at your regular fee — just as you would with a 401(k).

If you’re qualified for an HSA, building contributions to it right before putting added cash into your 401(k) is a no-brainer to max out your tax breaks. Just be conscious that the maximum HSA contribution in 2022 is $3,650 if you have self-only coverage and $7,300 for relatives protection, very well beneath the boundaries for a 401(k). You can invest up to $20,500 in a 401(k), with an even greater cap of $27,000 for these 50 and more mature who are qualified for catch-up contributions. So if you might be conserving aggressively, you may well operate into the HSA cap and want to strategy accordingly.

2. IRAs can provide superior financial investment selections

Just after maxing out your employer match (and probably your HSA), you must also assume significantly about placing funds into an IRA. Which is due to the fact IRAs can be opened with any economical establishment, and you get to make your mind up for you as a substitute of becoming trapped with regardless of what 401(k) program your employer has picked.

Commonly, a 401(k) has a limited pool of financial commitment alternatives. But considering that you have the freedom to come to a decision where by to open up your IRA, there are number of restrictions to what you can make investments in. If you want to invest in specific stocks or even cryptocurrencies in your IRA, you can. So why not place cash into an account that gives you the very same tax breaks as a 401(k) but offers much more regulate more than what you do with your investing bucks?

All over again, an IRA does deal with decrease contribution limits with a maximum of $6,000 in 2022, furthermore an more $1,000 for qualifying capture-up contributions.

3. 401(k) accounts may well appear with superior service fees

At last, the past purpose to contemplate restricting your 401(k) contributions is mainly because these accounts can often be costly. Your 401(k) administrator most probably rates a cost, and some or many of the financial commitment choices in your 401(k) may have increased expenditure ratios than other possibilities you could entry by means of an IRA.

This is not the scenario in each state of affairs, but if you can acquire accessibility to much less expensive investments outside of your 401(k) in a further style of tax-advantaged retirement account, you ought to do so to keep your investing fees down.

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July 22, 2022

3 Reasons to Avoid Dividend-Paying Stocks | Smart Change: Personal Finance

(Maurie Backman)

You can find a purpose lots of traders are fast to load up on dividend-having to pay stocks. The idea of a continuous earnings stream can be rather desirable. And also, all through a down sector, ongoing dividend payments could support offset losses in your portfolio. At the time you safe a constant stream of dividend payments, you can have the possibility to reinvest that money for included advancement.

Whilst it can be simple to see the attraction of shares that pay out dividends, they have their pitfalls, as properly. As these kinds of, below are a number of good reasons why you may not want to go way too heavy on dividend shares in your portfolio.

Impression source: Getty Pictures.

1. They could maximize your tax load

If you maintain dividend shares in a tax-advantaged account like an IRA or 401(k) plan, you would not have to stress about paying out taxes on your dividend money calendar year soon after 12 months. But if you obtain dividends in a taxable brokerage account, these payments could insert to your IRS load in a massive way. This holds correct even if you come to a decision to reinvest your dividends, as opposed to cashing them out and expending that dollars.

The superior news is that capable dividends are taxed at a far more favorable price than normal profits, so that tax strike may well not be as extreme. But you can expect to continue to have to have to preserve that tax consequence in head, particularly if you are inclined to owe the IRS a whole lot of income most tax seasons.

2. You could possibly sacrifice share-rate appreciation

Firms that pay generous dividends generally do so at the expenditure of reinvesting in the enterprise itself. And that could limit the extent to which all those firms are equipped to grow and create profits.

Whilst dividend-shelling out stocks may possibly serve as a great supply of ongoing profits for you, your shares may not respect at the similar charge as the stocks you personal that you should not pay out dividends. If your principal goal is to produce a whole lot of long-time period growth in your portfolio, that could be a dilemma.

3. You could make investments in firms that aren’t seriously sturdy enterprises

It truly is simple to see the enchantment of a stock with a generous dividend — you get a continual stream of income to glimpse ahead to. But do recall that a high dividend produce isn’t normally indicative of a sturdy underlying business.

In simple fact, if you are going to buy dividend shares, somewhat than look at a firm’s existing dividend, you may possibly want to glance at its dividend payment record. A firm which is regularly paid or lifted dividends might be a a great deal far better, more secure wager than a corporation with a dividend produce that not too long ago amplified to a substantial degree.

Glance at the large photo

It is simple to get caught up in the notion of chasing dividends. But a greater strategy is to devote in high-quality corporations with potent advancement possible. If people providers transpire to pay dividends together the way, wonderful — but that really shouldn’t be the principal driver in your determination to make investments in a supplied enterprise or not.

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When our award-successful analyst group has an investing tip, it can shell out to hear. Right after all, the e-newsletter they have run for more than a decade, Motley Fool Stock Advisor, has tripled the marketplace.*

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July 13, 2022

3 Great Reasons to Take Social Security Benefits at 62 | Personal-finance

Any day now, you can hope your most current quarterly 401(k) assertion from your employer that demonstrates the existing value of your existence discounts, and you likely foresee that the inventory and fund part of your financial savings has misplaced benefit considering the fact that your previous assertion. Recognizing inflation is a lot increased than normal, desire premiums are rising, and the overall economy may well be headed into recession, it is not shocking that your investments are impacted. But for the very first time, in addition to your existing 401(k) equilibrium, businesses exhibit projections that illustrate what your lump sum personal savings could appear like as month to month money right after you retire. These figures may well be lessen than you believed.

Finding a monetary advisor you can have faith in who has the knowledge you need to have and is dedicated to doing work in your very best passions can be overpowering. That is why you must look at Wealthramp’s no cost economical advisor matching support. Each advisor in the Wealthramp community is rigorously vetted. Solution some brief issues, critique your advisor matches and timetable a no cost meeting with any or all of your matched advisors. Wealthramp will hardly ever offer your details. You won’t get pushy gross sales calls from them. If you are prepared to see your most effective advisor matches, get started off now.

So what is upcoming? As the Fed tightens into a slowing economic climate, there is a high threat of economic downturn, and even a gentle contraction in economic growth can previous for months or decades. Telltale signs of recession among the other matters are when retail sales are falling, producing slows down, corporations cease employing, and additional people today possibly shed their careers or get laid off. As alarming as the news could look, economic downturn is element of the typical business enterprise cycle. As an alternative of reacting, this is a fantastic time to revisit your economical strategy to position by yourself to prosper.

Regardless of whether you are taking care of your finances on your have or functioning with a trustworthy financial advisor to enable you take care of portion or all of your portfolio, right here are 5 essential actions you need to get now to maintain your funds in fighting trim all through challenging financial occasions.

1) Keep Your Credit score Rating Significant

In a time period of higher inflation, it expenses a lot more for anyone to borrow cash regardless of their credit rating score. However, people with lessen credit scores will undergo even far more. Lenders cost fewer to debtors who’ve demonstrated they will repay loans on time as agreed. Banking institutions use your credit score score as a useful way to see what type of a borrower you are. If around time you’ve demonstrated a sample of having to pay credit card debt late, creditors will be wary of lending you money. The shorthand metric utilized to measure borrowing habits is your credit score — a low 1 signifies that loan companies are anxious you will not spend them again. To account for that risk, lenders demand more to lend to iffy borrowers in the variety of increased interest prices.

This isn’t the time to make it possible for your credit rating to slip. If you do require to borrow cash, you are going to want to do it at the cheapest doable interest charge, which is reserved for all those who have higher credit history scores around 700. If you are carrying credit score card balances 12 months in excess of yr, have you looked at the desire level you are paying out? A usual credit score card prices you around 25{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in once-a-year curiosity. For example, imagine that you acquired a established of summer season patio home furniture on sale for $10,000. If you have an exceptional stability of $10,000 on your credit cards and you really don’t pay out it off, it is like adding $2,500 on best of what you paid out for the table and chairs.

2) Keep Your Funds Reserves

It’s critical to get to the stage exactly where you know you have preferably 6 to 12 months of all set cash in an accessible account for emergencies and sudden expenditures. In a economic downturn, that reserve fund becomes even extra necessary in scenario you shed your position or any key unexpected function transpires to you and your household. If you have ample of a discounts cushion, you will snooze much better. The draw back is that banking institutions do not pay out a great deal on their cost savings or cash sector accounts, but the advantage is that you’ll be capable to entry revenue right away with out having to probably promote getting rid of shares to increase cash when the market place is down. It also presents you the independence to know you won’t have to have to choose out a bank loan when fascination prices are heading up. It would seem unfair that financial institutions are speedy to elevate borrowing costs and much slower to maximize rates on price savings accounts, but the money security that comes with liquid income reserves is worth it. The best way to established apart added pounds is to make the lifestyle decision to stay underneath your implies.

3) Devote, But Don’t Gamble

Lengthy-expression inflation eats into your cost savings and investment returns. When inflation is large — and not too long ago we’ve found inflation strike 8.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} — that implies you’re paying extra but having very little extra in return. An inflation level shut to 9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} is 4 times bigger than the norm. And around the many years, even at decreased costs, inflation will take a toll. The ideal way to stay ahead of inflation is remaining invested in a varied portfolio of stocks since above time, stocks are inclined to develop speedier than inflation.

If you are not confident how to develop a diversified portfolio intended to defend and grow your cash, this is where an founded fiscal advisor who is impartial and carefully vetted can support. Obtaining a money advisor you can have faith in who has the skills to meet up with your monetary requires and is dedicated to performing in your finest pursuits can be mind-boggling. That’s why you may well want to consider Wealthramp’s no cost economical advisor matching services. Each advisor in the Wealthramp community is rigorously vetted. Response some quick inquiries, critique your advisor matches, and schedule a no cost conference with any or all of your matched advisors. Wealthramp will under no circumstances offer your data. You won’t get pushy gross sales calls from them. If you are prepared to see your greatest advisor matches, get started out now.

Just take from the specialists — investing is the turtle, not the hare. John Bogle of Vanguard Team said investing is meant to be dull — investment decision expert Ben Stein asks what’s wrong with normal? — billionaire trader Warren Buffett hardly ever gambled. Buffett earned his billions by watchful, constant price investing. He missed the finest second to get into Apple (AAPL). To this day, he is continue to not invested in Tesla (TSLA). He doesn’t recognize Bitcoin and doesn’t want to find out. In his overall investment decision profession, he has almost never had a blockbuster gain. So how did he accumulate so much wealth? In addition to very careful investing, an generally-overlooked cause is that he has lived a really very long life.

4) Discover Inflation Hedges

One more tactic all through a economic downturn is to select investments that act as hedges towards inflation in excess of extended intervals. Gold and commodities are the go-to brief-term investments for shielding your portfolio from stock sector shocks because commodities like gold are inclined to go in the reverse path from shares. Having said that, gold is a very poor prolonged-phrase financial investment, which is why lots of fiduciary economical advisors propose hedging only about 5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of your portfolio. When you request to defeat inflation, one particular of your ideal practices is to absolutely diversify your portfolio. That does not indicate randomly selecting trade-traded cash in various sectors. Diversification calls for that you generate a program that you stick to and revise when sector indicators display you its time. Your greatest wager is to connect with a fiscal advisor who can glance at your portfolio and assistance you make positive it is diversified.

5) Brush Up Your Resume and Strengthen Your Skills

Right now, unemployment is at a historic lower in the U.S. No matter whether it is shallow or deep, recession frequently leads to corporations laying off personnel. The best way to defend by yourself from getting rid of your occupation and to ensure that you triumph in obtaining a new occupation if important is to make you as worthwhile an worker as doable. If your recent business delivers education reimbursement, soar on that reward and do the job on a diploma or a certification that can improve your future earnings. There are also low-price or free of charge education courses you can pay for on your own to strengthen your resume. Retain a history of your accomplishments at operate to transform a conventional resume and cover letter into just one that will help you stand out and entice the ideal interest. And keep closely related to your professional and personal network.

Steps to Get These days

As you get defensive action to protect yourself and your spouse and children from economic downturn, decide regardless of whether to do it yourself employing digital resources or collaborate with a rigorously vetted, price-only fiduciary monetary advisor who operates only for you, not as an agent for a brokerage company or insurance coverage business. If you’re getting near to retirement, choose a fiduciary who has the abilities and specializes in retirement income planning. They can help you:

Make a tax-targeted strategy on your individual or with their information
Produce an expenditure strategy you will be in a position to adhere to over time
Devise approaches to pay out down significant-desire debt
Shore up hard cash accounts

Discovering the correct money advisor can be difficult. Enable Wealthramp support you find the appropriate advisor who will aid you with your own economic demands and circumstance.

Pam Krueger is a acknowledged trader advocate, award-profitable individual finance journalist, and founder and CEO of Wealthramp, a no cost advisor matching system that connects folks with rigorously vetted charge-only financial advisors. She is also the creator and co-host of MoneyTrack, which aired on PBS from 2005-2019, and Close friends Communicate Dollars podcast for PBS Up coming Avenue at this time in its 7th period.

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May 31, 2022

3 Reasons Every Parent Should Consider a 529 Plan | Personal-finance

(Stefon Walters)

A 529 system is built to assistance you preserve for a kid or family members member’s bigger education charges. These programs are administered and managed at the state degree, so some features can change by condition, but they all provide the same function. There are two 529 prepare alternatives: prepaid and price savings. Prepaid 529 plans basically enable you pay out for foreseeable future tuition at modern price, and 529 cost savings options, which are a lot more typical, get the job done similarly to retirement personal savings accounts like IRAs.

Here are a few explanations just about every mum or dad need to take into consideration a 529 approach.

Picture source: Getty Photos

1. There are tax gains

You make just after-tax contributions to a 529 prepare, but unlike with a standard brokerage account, your investments get to improve and compound tax deferred. Contributions to a 529 approach usually are not tax-deductible federally, but some states allow for for deductions. For instance, North Carolina won’t allow for deductions, South Carolina lets you to deduct the full volume of your contribution, and Ga will allow deductions of up to $4,000 ($8,000 if joint beneficiary).

In addition to your investments rising tax deferred, you also get to get tax-free of charge withdrawals from a 529 prepare for experienced education bills, such as tuition, housing, laptop and computer software, books, and food ideas. If you prepare to deliver your little ones to private school for the duration of K-12, you can also use 529 system expenditures for tuition (up to $10,000).

If you are saving for your child’s tuition, you may possibly as nicely do it in an account with tax strengths. Getting your dollars compound tax deferred with tax-totally free withdrawals can conveniently help you save you hundreds in taxes.

2. They have higher contribution limitations

Compared with Coverdell training personal savings accounts — which have $2,000 contribution limitations — 529 ideas never have once-a-year contribution restrictions. They do, however, have mixture contribution boundaries ranging from a few hundred thousand to about 50 {1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} a million, depending on your state. The aggregate contribution restrict is how substantially you can lead whole to a prepare, but you will find nothing at all dictating how considerably you can add annually.

If your target is to contribute $100,000, you can do $10,000 for 10 many years or $25,000 in four several years the decision is all yours and relative to your usually means. When you’ve got contributed your state’s aggregate contribution restrict, you can no for a longer time lead to the account, but it’s going to carry on earning income. If you have many young children, these substantial contribution boundaries can be a main reward.

3. You you should not will need to be an expert trader

Whilst the money in 529 plans is staying invested, you will not require to be an professional trader to have a excellent portfolio that provides very good returns about the long operate. If you would prefer to just established your investments and not have to fret about it, you can elect into a person of your plan’s age-primarily based resources. These money reallocate as time passes, starting to be more conservative as your baby nears college or university age. Because stocks are higher chance, better reward, the fund will be stock significant early on for advancement and then change to “safer” investments to concentrate on preserving what you have earned.

Age-centered funds are inclined to have larger fees since they are actively managed, but if you’re on board with the “set it and ignore it” strategy, it could really nicely be really worth it.

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When our award-winning analyst staff has an investing idea, it can shell out to listen. Immediately after all, the publication they have run for more than a ten years, Motley Idiot Inventory Advisor, has tripled the industry.*

They just exposed what they think are the ten very best stocks for investors to obtain proper now… and Walmart wasn’t one particular of them! That’s proper — they consider these 10 stocks are even much better purchases.

Inventory Advisor returns as of 2/14/21

The Motley Fool has a disclosure coverage.

April 11, 2022

7 Reasons IRAs Are the Best Thing Since Sliced Bread | Personal-finance

(Selena Maranjian)

According to the folks at Gold Medal Bakery, sliced bread was invented on July 7, 1928, when Otto Frederick Rodwedder developed a bread-slicing machine. IRAs, on the other hand, came into being much later, in 1974, via the Employee Retirement Income Security Act (ERISA).

Often underappreciated, IRAs can be surprisingly powerful wealth builders — and given that they can save us from financially precarious futures, they’re pretty great indeed — arguably even better than sliced bread.

Image source: Getty Images.

Here’s a look at IRAs, featuring seven reasons you should consider setting one up — or contributing more to and/or investing more effectively in one you already have.

1. They can make you rich

Let’s start with the most exciting thing about IRAs: They can help you amass a lot of money. There’s a limit to how much you can contribute to an IRA (or several, with the limit applying to the total contributed to all), and it changes every year or few years.

It’s worth noting that IRA limits are far lower than 401(k) ones, but that doesn’t take away from the potential growth of an IRA. Here are the latest limits:

For 2022	401(k)s	IRAs
Contribution limit for all	$20,500	$6,000
Additional “catch-up” limit for those 50 and older	$6,500	$1,000
Total possible contribution	$27,000	$7,000

The table below shows how much you might amass just investing $6,000 each year — or $12,000, if you’re married:

Growing at 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for	$6,000 invested annually	$12,000 invested annually
5 years	$38,016	$76,032
10 years	$93,873	$187,746
15 years	$175,946	$351,892
20 years	$296,538	$593,076
25 years	$473,726	$947,452
30 years	$734,075	$1.5 million

Data source: Calculations by author.

Ideally, an IRA will be just part of your overall retirement plan, so while you might be regularly socking $6,000 away in your IRA (or more, especially when contribution limits are raised), you could also be adding thousands of dollars per year to a regular, taxable brokerage account.

2. They can help secure a comfortable retirement

Making good use of your IRA(s) can help you retire with more peace of mind, assured of a nest egg you can draw on to help support yourself.

You’ll likely have Social Security income, of course, but know that the average monthly retirement benefit was recently just $1,665, or about $20,000 annually. You’ll probably want a lot more than that.

3. They can help you avoid taxes now — or later

Another great thing about IRAs is that they’re designed to help you save for retirement in a tax-advantaged way. There are actually two main kinds of IRAs — the traditional IRA and the Roth IRA — and they differ chiefly in the tax breaks they offer.

With a traditional IRA, your contributions are tax-deductible, so they shrink your taxable income for the year of your contribution and, thereby, your tax bill. Roth IRAs, on the other hand, offer no upfront deduction, but if you follow the rules, you can eventually withdraw money from your account tax-free.

4. They offer a wide range of investments

Remember how 401(k)s have much bigger contribution limits, making them seem better than IRAs? Well, here’s a significant upside for IRAs: You can invest in a far broader range of stocks, funds, and other securities in your IRA account than you can in a typical 401(k), which offers only a very limited menu of funds.

So if you want to invest in a bunch of individual stocks — such as growth stocks and/or dividend-paying stocks — you’ll be out of luck with your 401(k), but you can do so in your IRA. (Note: If you invest in stocks that end up soaring and they’re in your Roth IRA, you will likely have a hefty account come retirement that you can tap tax-free.)

5. They’re available to just about everyone

Next, IRAs can be used by most people, with a few income limit restrictions. Anyone can contribute to a traditional IRA, but for the contribution to be deductible, your income will need to be below a certain level. Roth IRAs have income restrictions, too, keeping high earners from contributing fully or at all. Note that Roth IRAs also have to be funded with earned income — so you can’t fund one with lottery winnings, and your kid can’t fund one with allowance money.

Those limits will affect only high earners, not those bringing in typical or even somewhat-above-average wages.

Here’s another IRA distinction: 401(k) accounts are available from many employers, but not all, and self-employed people are out of luck. But self-employed people can contribute to traditional or Roth IRAs — and there are several other special IRAs they might use as well, such as the SIMPLE IRA and the SEP IRA.

6. They’re easy to set up

IRAs are also easy to set up. You can establish an IRA with any good brokerage — and possibly even at your bank. Do a little comparison shopping first, and be sure the IRA you set up will let you invest in the kinds of things you want, such as individual stocks or certain mutual funds — and check out fee schedules, too.

These days, some brokerages are offering no-fee IRAs, while others do charge fees. Always opt for no fees — otherwise, you’ll needlessly be handing over a portion of your earnings regularly.

7. They’re flexible

Finally, IRAs are flexible in some ways. For example, when you leave a job where you have a 401(k) account, you can roll over your 401(k) into an IRA account. You may also be able to turn that account into a 401(k) with your new employer. Try not to just cash it out, as that can shortchange your retirement.

Meanwhile, if you earn too much to contribute fully to a Roth IRA, you may be able to invest in one via a “backdoor Roth.” You would contribute to a traditional IRA and then convert it to a Roth. You can convert a 401(k) account to a Roth IRA, too. Just know that any funds you convert that had originally bypassed taxes will count as taxable income.

Don’t underestimate the wonderfulness of IRAs. Read up on them and their rules and see which kind(s) will serve you best.

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