Question

What are some of the benefits of investing in an IRA, a non IRA, or spending the money.

What about a split decision: investing some and using a bit for a cheaper vacation?

How much should be saved?

Answer 1

Some of the benefits of investing in followings -

Investing in an individual retirement account (IRA) helps one to save money regularly in an organized manner. It allows some tax advantages on regular savings and withdrawals after retirements.

Investing in a non IRA gives more flexible options of savings as the amount of investments and time of investments can be flexible and as per individual’s connivance. Withdrawal of money could be based individual’s other needs not only retirement.

Spending the money can give instant pleasure to individuals where they can use the money as per their desire. Spending the money also reduces the risk associated with time value of money like inflation and fluctuation in interest rates.

A split decision: investing some and using a bit for a cheaper vacation is a rational way of thinking where by investing some amount one insures its future money needs and also spending a bit of it gives them a feeling of satisfaction which they get from doing something desirous.

How much money one should save is a very difficult question and this amount varies person to person based on their present income, saving capacity and future needs. But if possible, one should definitely save some amount of their earnings to deal with future uncertainties and to ensure the source of income at the time of retirement.