Do you have to contribute to an IRA in order to invest in mutual funds?
Thursday, January 12th, 2012 at
6:00 pm
How does it work? What if I wanted to invest in a mutual fund separate from an IRA? Is there a maximum contribution for investing in mutual funds like there is when you invest in an IRA?
Filed under: Retirement Planning
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An IRA is just a designation for any type of account. You can invest in almost any type of instrument and call it an "IRA" (for example, you can invest in real estate and call it an IRA–as long as it complies with the rules for contributions and distributions that come with an IRA).
IRAs have tax deferment as their advantage. Theoretically you will be in a lower tax bracket when you begin to withdraw the funds, thus the tax on the income will be less than if you had them in a "regular" investment account..
So… mutual funds are just a type of investment instruments available for IRA purchases, but you can invest in them for other purposes and without limit.
You do not need to contribute into an IRA to participate in a mutual fund. Just go into a fidelity or edward jones and say you want to invest your money, they’ll go through a list of options for you.
You can invest as much as you want – as long as it’s not an IRA.
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You can invest in mutual funds anytime. Go direct with the mutual fund house – invest in good no-loads like Vanguard or T. Rowe Price.
IRA is a type of account. Investing in a mutual fund is a form of investment. Money in the IRA accounts can be invested in mutual funds, stocks, bonds, CDs or cash. In order to Invest in mutual funds, all you need is an investment account. That can be opened in any brokerage firm such as Fidelity, Vanguard, T-Rowe Price, E-trade or your local bank’s investment branch.