Target Retirement Mutual Fund vs IRA?

Giving the fact the when you retire and you can withdraw your IRA without pay tax, why not just invest in IRA instead of Target Retirement Fund, which normally are mutual fund?

A tax deductable IRA, requires you to pay taxes on withdrawals.

The difference between controlling your own brokerage account via an IRA, rather than buying a Targeted Date fund, is really about whether you like to determine and trade your own stocks.

if you are looking to put money already taxed into a Roth IRA to withdraw without taxes, the same question applies. who should manage your money? You or a mutual fund or a commissioned broker?

You have some incorrect information. I suggest you go to the T. Rowe Price or Vanguard website and read the basic stuff about retirement. For nearly everyone, especially a beginner, mutual funds are the best for your retirement. Target retirement funds are a good way to buy mutual funds for your IRA (or for your 401K). Whether you buy traditional or Roth IRA, stay with either of these two companies. Both have Target Retirement Funds which would be very good for a beginner like you. Ask several people who know (but don't sell investments) about these companies or buy any month's copy of Money magazine and read some of the articles.

First, a "traditional" IRA is taxed when you withdraw, because it wasn't taxed when you bought it. A "Roth" IRA is not taxed when you withdraw because you buy it with money you already paid tax on. Which is best for you is hard for anyone to tell you.

A 401K plan is like a "traditional" IRA, because you are taxed when you withdraw but not when you buy it. One difference is that your company chooses which mutual fund companies' funds you can buy. Many small companies have 401Ks with really poor mutual fund companies or with insurance companies, which is worse. Now, if your company is matching your 401K "contribution" with money of their own (not part of your salary), it still is probably good to use the 401K.

I know this is confusing. I think you need to find several friend and ask each (separately) what they think is good for your situation.

All three are going to be mutual funds which you select. The best ones for a beginner are the two I mentioned above- neither will try to cheat you.

The target retirement mutual fund (from Vanguard or T. Rowe Price) is an excellent choice for you.

Hello,

I seen different versions of this question here and on other forums. You are not the only one who is somewhat confused by the mutual fund/IRA issue. An IRA is nothing more than a tax structure that is worthless if it is not filled with an investment. When you open an IRA, you need to select an investment such as a mutual fund.

Target retirement funds by themselves do not offer tax advantages. These investments were created to help people with their asset allocation. The idea behind it is if you know your retirement date, you can very easily pick a mutual fund to meet your retirement needs.

I hope this helps.

Michael A. Weiss, CFA
The Editor
The Mutual Fund Investor
http://www.mutualfundinvestor.net