Investing Terms: Types of Retirement Account (Part 2)

Here is the second part of the investing terms you must familiarize yourself with when it comes to possible retirement accounts you can get yourself in. After all, there is no such thing as too much research when it comes to making sure that you will have the best possible future once you retire.

(IRA: Individual Retirement Account)
SEP means Simplified Employess Pension. Even if you’re self-employed, who says you can’t have a retirement account? Self-employed people and small business owners can use SEP-IRA under certain circumstances. This will give you the chance to set aside considerably larger money than what you might have otherwise been able to invest because of much higher contribution limits which were calculated as percentage of income.

(IRA: Individual Retirement Account)
This is best if you’re a small business owner which has less than 100 employees. If you would want to offer some kind of retirement benefits to your employees, or if you’re an employee of such business, you can then offer or accept this IRA. This is considerably less complicated than the 401(k).

Traditional IRA
(IRA: Individual Retirement Account)
This is the earliest type of IRA. As an investor, you can contribute money to it if you qualify based on the income limitations. Another qualification is if you do not pay taxes on certain types of investments which are held within the account until the time of withdrawal at 59.5 years old, or forced to withdraw at 70.5 years old.

As bonus, here are some terms that you might encounter when dealing with companies.

Balance Sheet
This will show you the company’s assets, liabilities, and shareholders’ equity.

Board of Directors
These people are elected by the stockholders. They are tasked to watch over the interests, hire and fire the CEO, give and create the official dividend payout policy, as well as deliberate to endorse or vote against proposed mergers.

Enterprise Value
This indicates the total cost of acquiring all of the company’s debt and stock.

Form 10-K
This is distributed yearly. It’s a document that is certain firms must file with the SEC. Form 10-K contains detailed information about a business, including but not limited to its: finances, and business models.

Income Statement
This will give you the information you need to know the company’s revenues, taxes, net income, and expenses.

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