Individual Retirement Accounts
Sharing many of the advantages with the 401K account, the Individual Retirement Account (IRA) is a second alternative for long-term investing. IRAs are not linked to specific employers; instead, you can pick most any investment and declare it as your IRA. By doing so, you gain the same tax deferral available to those saving in a 401K. Also like the 401K, you'll get a tax break on that year's taxes if using a traditional IRA, or be allowed to remove the money tax-free in retirement if saving in a Roth IRA. Given the same tax benefits as the 401K and a wider selection of investments, IRAs are an important part of a long-term investing strategy. On the minus side, they have a $5.5K annual caps vs. an $18K cap for a 401K.
Given the limited number of funds available in the military's 401K (TSP), IRAs provide great opportunity to diversify the holdings in your portfolio. Below we'll discuss some various options for IRA investing.
Actively Managed Mutual Funds
Index Mutual Funds
