Reasons to Open Another IRA

December 26, 2018
895 Views

The importance of an Individual Retirement Account (IRA) cannot be overstated. In some cases, opening a second or even third account could also be an option, and it’s one that millions of Americans are now considering.

Opening a retirement account will be one of the most important decisions you make to ensure a comfortable future. Retirement costs are increasing yearly, and without an effective savings plan in place, you could find your golden years to be unnecessarily stressful.

Multiple IRAs Offer Diversification

Opening more than one IRA with more than one financial manager will allow you to diversify your investment while taking advantage of different approaches. Different managers have different ideas regarding the investments that should make up an IRA. While one account might be heavily weighted towards publicly traded securities, another might use more alternative investments like precious metals or even real estate.

Having multiple accounts means that you will be able to take the gains from different investments as the market changes. Essentially, there’s a larger spread, which could result in better returns.

It’s Easier to Track Multiple IRA Accounts

It will be easier to gauge performance if you have more than one IRA account, even if the accounts are held with the same investment broker. This can help you to make sense of your retirement finances, and with the increasing complexity of the investment market, this can be hugely beneficial.

You’ll also get a better understanding of expenses paid on investments like real estate.

Tax Benefit of Multiple IRA Accounts

You’ll receive a tax deduction from a traditional IRA while you are working. With a Roth IRA, you’ll receive the tax benefit once you’re already in retirement. It’s difficult to tell which one would be better without knowing what the market will be like in 20 or 30 years. Splitting your investment across multiple IRAs will also allow you to split the tax structure, potentially saving you more money in the long term.

Invest in Your Future

Retirement planning is key to a comfortable lifestyle without financial stress. Multiple IRAs could be perfect for your needs, and the initial setup expense is minimal when considering the extended benefits. It can take some extra time and research to open multiple IRAs, but it could turn out to be the best decision if your retirement funding will primarily come from individual managed accounts.

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