An IRA stands for an Individual Retirement Account, and it's a way to put money away for your future self. This money doesn't get taxed the same way as regular income. There are several different types of IRA, but here, let's just talk about the Traditional IRA. You can open an account at practically any bank or brokerage firm, or you can wait until the our product, the MGB Investing Starter Kit, launches later this year. (I think you know which one we hope you'll do!)
The basic idea is: save money for your retirement, so that you can stop working when you're older, and still have cash for your expenses. The dollars you put in a traditional IRA don't get taxed until you start taking money out, and you're supposed to wait until you're 59 1/2 before you start making withdrawals. You're required to start taking out money when you're 72.
If you want to take your money out before you're just shy of 60, there are (wait for it...) penalties! That just means the government is encouraging people to let the money stay invested until retirement age, and you'll pay more to the government if you take it out sooner. In another blog, we will hear about some of the ways that people can take out money early without penalty. We'll also hear about other features of an IRA, like tax deductions and contribution limits...So much to learn!
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What is Money? is HERE
What is Investing? is HERE
What is The Investing Starter Kit? is HERE
Sign up for The Investing Starter Kit waitlist HERE.