Index funds are a good investment because they are cheap to own and easy to maintain. An index fund can be used as part of a Roth IRA. In order to invest a Roth IRA in an index fund, the account owner must earn money.
Other than the fact that a Roth IRA is also a retirement account, it's very different from a 401(k). With a Roth IRA, you're dealing with after-tax cash. The nice thing about the Roth IRA is that the cash grows tax-free forever and comes with a lot of estate-planning benefits.
Some consumers are pushing toward the idea of investing their retirement dollars in real estate. But the IRS prohibits real estate investments for Roth IRAs, 401(k)s and other retirement accounts. Retirement accounts can only be used in buying and selling mutual funds, bonds, CDs and company stocks.
How well prepared are you for retirement? A retirement plan can consist of investments in the stock markets and 401(K) and IRA accounts. To determine how much you'll need for retirement, use Money Magazine's calculator, at www.money.com.
About half of all Americans work for a company that offers a 401(k) retirement program, or another retirement savings option. Of those that offer a 401(k) plan, just over 60 percent participate. Here are some suggestions on how to make the most of your 401(k).
As you near retirement you may be thinking about where you want to live and why. Your retirement home can be a source of income if you take out a reverse mortgage. Also when you retire you may want to start a more active lifestyle living in a retirement community with other adults of similar age and interests.
