{"id":14343,"date":"2021-05-20T03:00:42","date_gmt":"2021-05-20T10:00:42","guid":{"rendered":"https:\/\/compounddaily.org\/?p=14343"},"modified":"2024-01-03T14:31:44","modified_gmt":"2024-01-03T14:31:44","slug":"savings-account-or-roth-ira","status":"publish","type":"post","link":"https:\/\/compounddaily.org\/savings-account-or-roth-ira\/","title":{"rendered":"Savings Account or Roth IRA?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400;\">If you have been wondering whether to stash your money into a<strong> savings account or Roth IRA<\/strong>, don&#8217;t assume that one is always the wiser choice. In much of the financial literature, on investing websites, and even in business school textbooks, it&#8217;s common to see savings accounts receive the brunt of the criticism. But, it shouldn&#8217;t be that way.<\/span><\/p>\n\n\n<style>.kb-table-of-content-nav.kb-table-of-content-id_00c8ef-ca .kb-table-of-content-wrap{padding-top:var(--global-kb-spacing-sm, 1.5rem);padding-right:var(--global-kb-spacing-sm, 1.5rem);padding-bottom:var(--global-kb-spacing-sm, 1.5rem);padding-left:var(--global-kb-spacing-sm, 1.5rem);}.kb-table-of-content-nav.kb-table-of-content-id_00c8ef-ca .kb-table-of-contents-title-wrap{padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}.kb-table-of-content-nav.kb-table-of-content-id_00c8ef-ca .kb-table-of-contents-title{font-weight:regular;font-style:normal;}.kb-table-of-content-nav.kb-table-of-content-id_00c8ef-ca .kb-table-of-content-wrap .kb-table-of-content-list{font-weight:regular;font-style:normal;margin-top:var(--global-kb-spacing-sm, 1.5rem);margin-right:0px;margin-bottom:0px;margin-left:0px;}<\/style>\n\n\n<p><span style=\"font-weight: 400;\">Why? Because the two <strong>financial arrangements<\/strong> are very different creatures, designed to do quite different things. Here&#8217;s a quick look at the key points to keep in mind if you intend to store your capital in one of the two.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/compounddaily.org\/wp-content\/uploads\/2021\/10\/Advantages-on-Taxes.jpg\" alt=\"Advantages on Taxes\" class=\"wp-image-16057\" title=\"\"><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Advantages on Taxes<\/strong><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Roth IRA&#8217;s are the big winners when it comes to the tax aspect. That&#8217;s because after you pay taxes on the initial amount (before depositing it into the <a href=\"https:\/\/compounddaily.org\/what-you-should-know-about-iras-and-compound-interest\/\">IRA<\/a>), you need not pay <a href=\"https:\/\/en.wikipedia.org\/wiki\/Tax\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">tax <\/a>on the interest earned during the life of the account, even when you withdraw the money years in the future.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">With savings accounts, you put &#8220;taxed&#8221; money into it, just as you do with the <strong>Roth IRA<\/strong>. But, as you receive interest from the deposits, it&#8217;s necessary to pay tax on any annual gains. So, in the area of taxation, the <strong>Roth IRA <\/strong>has the advantage.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/compounddaily.org\/wp-content\/uploads\/2021\/10\/Free-Use-of-Your-Own-Money.jpg\" alt=\"Free Use of Your Own Money\" class=\"wp-image-16058\" title=\"\"><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Free Use of Your Own Money<\/strong><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">With good comes bad. In other words, even though you legally avoid paying tax on interest in a Roth, you can&#8217;t always pull the money out and use it whenever you want, as is the case with traditional savings accounts.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you have been wondering whether to stash your money into a savings account or Roth IRA, don&#8217;t assume that one is always the wiser choice. In much of the financial literature, on investing websites, and even in business school textbooks, it&#8217;s common to see savings accounts receive the brunt of the criticism. But, it [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14346,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":{"0":"post-14343","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-compound-daily-news"},"_links":{"self":[{"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/posts\/14343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/comments?post=14343"}],"version-history":[{"count":0,"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/posts\/14343\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/compounddaily.org\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/media?parent=14343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/categories?post=14343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/compounddaily.org\/wp-json\/wp\/v2\/tags?post=14343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}