Before you start investing, please make sure to read my post on making sure you’re ready to start investing.
So let’s say you are. Congratulations and good work.
By the way, I used quamut.com for this blog.
First, start by deciding what kind of investments you are looking for and select a brokerage firm or broker. Are you looking to buy gold, stocks, etc.? I own mostly mutual funds, and I invest my money for myself. I use Vanguard for my funds. I really like their low fees, that I read about them ranking well often, and they are easy to do business with. Oh, helpful too. Anyhoot, not everyone can safely do that, and will see much better returns paying someone else to do it for them. Once you’ve got these decisions made, you’re all set to start investing!
Types of Investment Accounts-
As we talked about in previous blogs, an investment account is a special type of financial account where you can but, sell, or hold investments. There are two main types of investing accounts.
1. BROKERAGE ACCOUNTS- also called taxable accounts. This are what I think of as shorter-term investments. They allow you to invest and withdraw money at any time, for any reason. When you do, however, dont think you can escape Uncle Sam. You’ll have to pay income taxes on all dividends received AND capital gains tax on all assets sold that made profit.
2. RETIREMENT ACCOUNTS-These accounts allow your money to grow without taxation on dividends or investment gains, which can help increase your returns. BUT, some retirement accounts have restrictions. Like most have maximum limits you can contribute each year, and you receive penalties if you withdraw early. Popular types of retirement accounts include the Roth IRA, 401k, 403b, Traditional IRA.
