Self Directed vs Traditional Roth IRA

If you are planning for your future by putting money aside for the time when you reach retirement age, there are a number of ways that you can accomplish this deceptively simple task. The simplest way is to just store some money away in a safe deposit box inside a bank or inside your house. Of course, the disadvantage to this simple method is that your money does not grow while kept in deposit and you are basically wasting away any opportunities for interest rate growth on any sum that you put away.

This is why many people opt to invest in long-term insurance policies and other types of interest-rate based investments. One of the more popular methods is to invest in an individual retirement account. The Roth IRA system is a very beneficial type of individual retirement account that is both beneficial and convenient for almost all classes of employees and workers under a set earning capacity. It is worth noting that not all working individuals may be qualified for the Roth IRA system. Generally, only those whose marginal adjusted gross income fall below a certain ceiling are qualified to make contributions to a Roth IRA.

If you are eligible for the Roth IRA system, however, you cannot go wrong with it. There are two main types of Roth IRA available. The first is a type of insurance product offered by many leading insurance companies. The IRA is directed by the insurance company and has a set projected growth rate. The other type of Roth IRA is what is known as a self directed Roth IRA. Under this system, the account holder establishes the IRA himself by classifying certain investments under the Roth IRA system. The advantage of a self directed IRA is the host of investment opportunities available, which means more opportunities for huge returns on the IRA. The disadvantage, however, is that it is subject to more complex rules than an insurance company directed IRA.

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