Investing for the Absolute Beginner: Part III. Which Account Type? (pfblogs.org)

-Part 1- -Part2- -Part 3-Now that I have covered the reasons to invest and reviewed the different types of investments, in this installment of "Investing for the Absolute Beginner" I will go over the various types of investment accounts in which to hold those investments. I will be covering the 401(k), the Traditional IRA, the Roth IRA, and the taxable account. Each of these account types has its own advantages and disadvantages, and they are not mutually exclusive insofar as they can be used in conjunction with one another for various tax benefits and purposes.401(k)What is it?The 401(k) is your single most important investment vessel for building wealth through investing. A 401(k) is a retirement investment account set up by most corporations (and some smaller companies) to enable its employees to save and invest a percentage of their income for retirement. The distinguishing characteristic of a 401(k) versus other types of retirement accounts is that the contributions are pre-tax, the benefits of which I will discuss below.Pros:The pros of a 401(k) account are numerous. First, many companies will match your contributions dollar-for-dollar up to a certain percentage of your income. This is ...