Basics Of Mutual Funds :: essays research papers

In this report I decided to take advantage of an opportunity to get information on how best to invest money for my daughter’s college fund. The choices are between Mutual funds or an IRA. Thanks to the research I did for this I have made up my mind how best to invest my money.   Ã‚  Ã‚  Ã‚  Ã‚  My main research I did on the IRA is on the Internet through AOL. Through them I found out in a Traditional IRA’s you can contribute up to $2,000 per person per year tax free. In other words the $2,000 invested is deducted off your total income for that year. Yet when you retire and receive the money it is then taxed. Also in a Traditional IRA you cannot remove the money prior to retirement without being heavily penalized. In a Roth IRA you pay taxes on it the year that you invest the money. Though the Roth IRA does bring some benefits such as you can retrieve your money without being penalized as long as you opened your account over five years prior to withdrawal and your are at least 59.5 years old at time of withdrawal. Some exceptions are death, disability or first time purchase of a home. There is also an Educational IRA which you can contribute a maximum of $500 per year per child. This obviously is only good enough for a college education if you plan to invest in other places. On the AOL site I used it had a page where you enter in your date of birth and how much money you wish to contribute. I entered in both DOB-7/9/79 (approximately 46 years until retirement) and that I wish to contribute $2,000 a year. It then stated that with a Roth IRA I would have $1,058,685 and with a Traditional IRA I would have $1,036,239 (which I would have to still pay taxes on). Out of the two the obvious choice is the Roth IRA you pay taxes when you are working and have the extra money and it also has a higher turn over rate.   Ã‚  Ã‚  Ã‚  Ã‚  I then researched mutual funds. Mutual funds are a group of stocks together. It tends to be more stable then stocks since there is only one stock if it falls you’re out money, with a Mutual fund if one drops then the others generally tend to balance the loss out so you still tend to make money.