Which is better, Roth IRA or Traditional IRA?
There is no easy answer. Choosing between Traditional IRA and Roth IRA completely depends upon several of factors like
- Age (i.e. time between now & retirement)
- Your income & expenses.
- Tax bracket now & after retirement.
- Returns i.e. earnings on your contributions.
Typically in long run Roth IRA beats Traditional IRA.
Assuming you get 10% average return on your Roth IRA investment, it is better to go for Roth IRA. Longer the money in Roth IRA, more time for earnings to grow. So eventually your earnings (gains/interest) will be far more than your actual contribution. And real gem of Roth IRA is, earnings are TAX FREE after 59 1/2 yrs!!
