Roth IRA vs Traditional IRA vs 401K (SIMILARITIES & DIFFERENCES)

ROTH IRA VS TRADITIONAL IRA VS 401K // A comparison of the 3 major retirement accounts: Roth IRA vs Traditional IRA vs 401K, and whether you should open a Roth IRA or Traditional IRA, and why you should have an IRA along with your 401K.

The difference between a Roth IRA vs Traditional IRA confused a lot of people, but in this video, I explain what is IRA account, whether you should open a Traditional vs Roth IRA, what is Roth IRA and how does it work, IRA explained, and all about retirement accounts and investing for beginners. After a comparison of Roth IRA vs Traditional IRA, I also explain what is a 401K plan, and how the IRA and 401K work together to help you invest your way to financial freedom.

You'll see that the 401K vs IRA is a very subtle difference and that you actually don't have to choose between the two, so watch the video for an investing 101 tutorial on Roth IRA vs Traditional IRA vs 401K!

***ATTENTION: I have a new Instagram and TikTok handle @itsrosehan ***
That's my official account, and I will NEVER message you about investment schemes, so please be careful and block & report any scammers posing as me.

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***FREE DOWNLOAD: The Ultimate Guide to Investment Accounts
Everything you need to know about IRAs, 401(k)s, HSAs, and taxable brokerage accounts. What they are, which ones you need, and where to open them!

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***BOOKS I RECOMMEND 📚***

I Will Teach You to Be Rich (hilarious how-to book on personal finance for millennials)

The Little Book of Common Sense Investing (Jack Bogle's classic advice on index funds)

InvestED (step-by-step, millennial-friendly advice on how to pick stocks like Warren Buffett)

Unshakeable (this book = courage. blast ALL the fears & misconceptions you have about investing)

Rich Dad Poor Dad (#1 selling personal finance book of all time... need I say more?)

Think and Grow Rich (the ultimate book on money mindset and wealth consciousness)

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YNAB (I literally can't live without this budgeting app, so obsessed)

Wise (like Venmo but for international currencies - I use this app a LOT for my life in Mexico)

Ledger Nano S (crypto storage hardware wallet, because "Not Your Keys, Not Your Crypto"!):

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DISCLAIMERS & DISCLOSURES ❤

This content is for education and entertainment purposes only. Rose does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.

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SAY HI ON SOCIAL! 👋🏼

[kellyfest]

I used this video for my 13 yr old who is taking a high school FinLit class that is literally written by the Fed Reserve and is super-borong & dry. He learned more from this video than an entire unit in his book! Thank you so much for doing these videos! - Kelly from TX

[anibalty]

I have watched three videos explaining the differences, and yours is the first one that I fully understood. Thank you very much for helping me make an informed choice.

[adventurenoob]

"Never say no to free money!" The best advice ever given!!!

[aprilgranados]

This is the third video I watched about the differences but it's the first one I understood, thank you very much for helping me choose!

[TheJustinBarker]

I have all 3. Wow that 401k match you had was no joke, that's how you do it!

[JLW]

0:54 Traditional IRA
2:22 Roth IRA
5:20 401k

[saberful]

I love how she said you can have both Roth IRA and a 401K. Super helpful video

[porquestasaquii]

So glad I found your videos!!! I've wanted to get into investing for YEARS and always felt so intimidated and confused when I tried to learn. I can't wait to watch all of your videos. You do a great job of making it feel accessible and easy to understand. Thankful for you!!!

[smileanjo]

Me wanting to open a Roth, but also wondering if im gonna live long enough to reach the age of 60 lol.

[yukon]

If this gets through, I'd like to say thanks for explaining everything in an easily digestible way. My comments don't seem to make it through for reasons unknown to me.

[SPER]

I love that she just throws out the word "shitload" out of nowhere. Brains, beauty and badassery.

[hkninja]

Great video, Rose. I really enjoy and learn from your videos.
As you favorite Roth IRA, the other side of the coin is that you saved the money from tax today with Traditional IRA so you can invest and grow it while continue working. When you retire, assuming that you will not be working full-time thus your income level decrease. As your income decreases, so does your tax bracket. Now, how much you got tax will depend on how much you withdraw form your IRA each year (assuming you're not withdrawing every penny at once.) In that case, you can somewhat control which tax bracket you will pay based on your withdraw, which will likely be lower than when you've a full-time job. Of course, that is based on the assumption that the tax bracket stayed constant. One last thought is, like Lisa said below, we never know how long we can live. So, maximum access to my money today seems ideal to me. That's my 2 cents.

[bubbathenaslover]

Great video, Im more of a fan of the Traditional IRA than I am the Roth mostly due to the fact of the major tax benefits I get yearly so I can use this to my advantage

[NewHampshireJack]

This video has been approved by the "old patrol". I am 65. One point not mentioned: there is a back door way for those over the income limit to establish ROTH accounts. You can do this late in the game or even better when you are young and switch employment. Open a ROTH and do a conversion from your previous employer's plan. It would be best if you have cash saved up to do a make-up contribution to cover the taxes withheld from your conversion. That way, you will maximise the growth potential of the new ROTH account. I have been steadily converting funds and am now down to one remaining IRA that I expect to have completely converted into the ROTH within the next two years. Never a worry about taxes or RMDs going forward!!!

[mojave]

Rose, gives great advice, but is also WAY better looking that 99 percent of the other investing channel hosts on Youtube!

[daveclawson]

Excellent video. I found the way you presented the content easy to understand. One thing you didn't mention that might be beneficial to yourself and others watching this is the Backdoor Roth IRA. If you make too much to contribute to a Roth IRA but still want to put money in you can contribute to a Traditional IRA and do a rollover to your Roth then pay the taxes you have to for the reclassification. Yes you pay some taxes but if you can grow those funds tax free I believe it's worth it. Might have to work with your brokerage firm to pull this off but if you can I think its worth it.

[xOTKxKillaKush]

Rose I just started a new job and your explanation is way better than my jobs way of explaining

[stoobpendous]

You are right about maxing out employer matches. When my coworkers pass on free money I'm left scratching my head.

[zackarywilliamson]

Very thorough and well explained video wrt IRAs, Roths, and 401Ks.I"m a novice and didn't understand the tax implications 'til now.Thank you.

[kravmagaCDK]

Thanks. I’ve been videos on this subject for two days and finally found one that made since. 💪🏾