Learn the 4 Most Common Types of Bank Accounts
CD Features to Look For
• While they are low risk and offer some interest, there are better locations to invest your money!
Things to Look for in a CD
• You’ll typically earn more interest in a CD than you would in a standard savings account, but you won’t be able to access those assets anytime you want, and you’ll be penalized if you withdraw your cash before the CD matures.
Retirement Accounts to Know About
After you’ve become acquainted with the most common bank accounts, you can investigate other forms of financial accounts, such as retirement funds. Individual retirement accounts, or IRAs, are a terrific way to save for retirement.
Traditional and Roth IRAs are the two primary forms of IRAs. Both are tax-advantaged retirement funds that allow you to do the following:
• You can contribute to an IRA as long as you have a job or your spouse has a job and you pay taxes jointly.
• Contribute up to $6,000 yearly ($7,000 if you’re 50 or older) or your taxable compensation for the year, whichever is less.
• Contribute even if you’re retired, as long as you’re generating money (like wages from a part-time or freelance job, but not pensions or Social Security) • If you’re married, open individual accounts.
IRAs aren’t your average savings account. Because they are intended for long-term retirement investments, you must pay taxes if you remove funds from a regular or Roth IRA before 59 1/2. You’ll also be charged a 10% early withdrawal fee.
Brokerage Accounts
The big man on campus is brokerage accounts. A taxable brokerage account allows you to invest in stocks, bonds, and mutual funds. It’s investment money. But just because you have money to invest doesn’t imply you should put it anyplace. It is critical to ensure that your money is being invested wisely.
We only recommend growth stock mutual funds with a track record of outperformance. That’s all. Good growth stock mutual funds allow you to distribute risk over a wide range of companies, from large and established to young and fast-growing while avoiding the risk associated with investing in single equities.
What Kind of Bank Account Is Best for You?
Taking control of your money entails keeping it in the greatest possible condition for where you are in your financial path. If you’re just getting started with your finances, checking and savings account is a good place to start. After you’re entirely debt-free and have a 3- to 6-month emergency fund saved, you may begin saving for retirement by looking into IRAs and mutual funds. Remember to avoid CDs, equities, bonds, and other risky investing options. Check to see if your bank is working for you!
