In the world of finance, understanding and deciphering financial filings is a key part of doing business. But what if you don’t know what to look for? What if some of the things you think are important are actually myths? In this article, we will explore some amazing financial filing myths and clear up any confusion you may have about them. By the end, you will be able to understand key information in financial filings without even having to read them!
Myths about using your taxes to save for retirement
Myth: You can use my taxes to save for retirement.
The reality is that you can't actually use your taxes to save for retirement. The money you pay in taxes goes into the government's coffers, and it isn't available to help fund your retirement. You're better off investing the money yourself.
Myths about IRAs
When it comes to retirement planning, many people think of IRAs as a great way to save for a rainy day. But myths about IRAs abound, and many people don't understand the real benefits of using an IRA account. Here are four of the most common myths about IRAs:
1) You have to start saving for retirement early in your career.
This is not necessarily true. Even if you begin contributing to an IRA at age 25, you can still enjoy tax-free growth on your contributions for up to six years. Plus, starting early won't necessarily guarantee that you'll have enough money saved up by the time you retire. If you're able to save more over time, even if you start making contributions later in your career, that's better than nothing at all!
2) IRAs are best used for high-deductible health insurance plans.
Actually, doing something else with your IRA money could be a better idea. A 2014 study published in The Journal of Retirement Planning found that nearly half (47%) of those who contribute to an IRA use their funds to buy stocks or mutual funds rather than pay down debt or save for retirement. This might make sense if you think that stock market volatility is a risk, you're willing to take on – but chances are you don't! In fact, investments like stocks tend to outperform fixed-income investments like CDs and bonds when it comes to long-term returns (this is especially true over the long term).
3) IRAs are a bad investment vehicle because they're subject to stock market volatility.
Actually, an IRA is a great way to reduce your risk when investing in the stock market. Unlike with 401(k)s or other workplace retirement accounts, you're not automatically locked into a particular investment choice – you can choose whatever stocks, bonds or mutual funds you want. And while stock market fluctuations can be quite volatile, over the long term they tend to produce better returns than investments that don't fluctuate.
4) You can't access your money until you reach retirement age – even if you die before then.
This isn't actually true! If the European stock listed companies have an IRA account at the time of your death, your beneficiaries can access the account immediately. In some cases, they may even be able to take advantage of tax breaks that allow them to pay taxes on IRA distributions at a lower rate than if the money had been invested in taxable assets. This could lead to significant savings for them down the road.