What Investment Accounts Should I Account For?
There are as many ways to invest as there are reasons to invest. Luckily, there are 3 basic types of investment accounts geared for specific goals. Check it out:
The chance to say goodbye to work one day is a big motivator for lots of investors. Luckily, there are accounts designed to help get you there, with preferential tax treatment, possible matching benefits and more. For military members, the Thrift Savings Plan (TSP) is much like a civilian 401(k) or 403(b). You can also set up a Roth or traditional IRA on your own.
The type of investments you can use in these accounts varies. The TSP and most employer-provided plans offer a pre-selected list of funds. With IRAs, you can choose from a longer list of investments — but there are restrictions on who is eligible and they have lower contribution limits than employer-provided plans.
College savings accounts
Maybe one of your goals involves sending a kid or two to college someday. If so, the Coverdell Education Savings Account and 529 College Savings Plans are popular ways to reach your college savings goals. And they too, offer some nice tax treatment.
General purpose accounts
Got goals that differ from the biggies above, or just want to do more to get to your goals? Look into a brokerage account or mutual fund account. With a brokerage account, you deposit money and use it to purchase investments that will be held in the account. With a mutual fund account, you invest directly with a mutual fund company.
There’s no one right approach. Use a combination of accounts to work towards your vision of the future.