Young and dumb student here trying to get a head start on getting my finances in order. So I keep hearing about these different investment strategies and all their benefits and whatnot, but I still would like some clarification on what/why they all exist. From what I understand:
- 401k: retirement fund that my company takes a cut out of my paycheck to support. Main benefit is that the company will contribute some money on their own.
Questions: What does it mean to “max out my 401k” and why might I want to do that?
- Roth IRA and IRA: Stock portfolio meant for retirement planning. Roth IRAs have the specification that money is taxed as it goes into the account, meaning when time comes to retire, the money in your Roth will not be taxed.
Questions: Why would I contribute to an IRA rather than just keeping a personal portfolio that I DCA into every month? It just seems easier since there’s no limit for income or yearly contributions
- Stock portfolio: A collection of publicly traded stocks that I personally curate.
My main question is why I should bother splitting my money across all these different platforms, when it just seems easier to put it all in a personal stock portfolio. I can see why the company matching for a 401k is beneficial obviously, but not so much Roth or traditional IRAs. Any and all help would be greatly appreciated!
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