From what I understand, you put money into this account (either post or pre taxed based upon what type of ira ur doing) and you invest it in certain things. But what I don’t get is how does this mean your money is consistently going up? Wouldn’t the money increase or decrease based upon the stuff you invested in, since it isn’t concrete money but invested money.
In: 1
>Wouldn’t the money increase or decrease based upon the stuff you invested in, since it isn’t concrete money but invested money.
Yes, this is exactly the case. If you make bad investments, you can lose money in your IRA.
Ideally, you *diversify* such that if one investment loses money, it’s offset by another investment gaining money. Or, you invest in something that’s already diversified like a target-date fund or an index fund.
You have the right idea
Generally, if you are doing an IRA, then you would invest in safe bets
It’s not *guaranteed* to gain value, but if your investments are sensible, over the decades you’re planning for, it really should. There **will** be down years, but the good years should more than make up for them.
Yes, it may go up and down in short term — your IRA might be lower today than in January — but over time a diversified portfolio of investments should go up 7-10% annually on average.
Latest Answers