Do you ever wondered what’s the difference between these two and which one of these two is actually better ?
A normal brokerage account is basically an account which offers no tax advantages for investing. In this account mostly your investment earnings will be taxed.
But the pros to these accounts is that there are very few rules for these accounts. On these accounts you can for the most part do almost what you want. You can take in and out money at any time you want without giving a reason why. And you can invest on these accounts just as you like and how much you like.
When it comes to the retirement accounts. These accounts are a tax-advantaged investment account specifically designed for your retirement savings.
Because of that these accounts have place restrictions around withdrawing money. There are also restrictions around how much you can contribute each year and how you can contribute onto these accounts.
Both the brokerage accounts and retirement accounts have benefits which the other accounts doesn’t have. So the call of which of these accounts are better is up to you, and what you are looking for when it comes to your investing journey.
Most jobs in USA and in Europe provide their workers with a 401(k) or some other retirement plan. So most of you might be already investing for retirement through your employer.
If you already have one retirement plan through your employer and you want to open a IRA or a new retirement plan outside work, you can still do that.