Diversify Your Portfolio: A Guide to Roth vs. Traditional Retirement Accounts

NerdWallet's Smart Money Podcast

NerdWallet Personal Finance

Business, Education, Investing, How To

4.2 • 665 Ratings

🗓️ 1 April 2024

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

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Summary

Learn to maximize retirement savings with tax diversification by balancing your Roth and traditional IRA contributions. 00:27 This Week in Your Money: What are expense ratios? How do you decide between a Roth and traditional 401(k)? Hosts Sean Pyles and Sara Rathner discuss understanding investment terms and retirement account options and strategies to help you understand how to make more informed and beneficial financial decisions. They begin with a new segment called Nerdy Vocab, in which they explain tips and tricks on recognizing how expense ratios affect your investments. They offer clarity on how fees can eat into your returns, explain how to utilize tools like the FINRA Fund Analyzer, and explain considerations for selecting cost-effective funds. 09:27 Today’s Money Question: NerdWallet writer Alieza Durana joins Sean and Sara to help answer a listener’s question about how to decide between investing funds in a Roth versus a traditional 401(k). They discuss the tax implications of different retirement accounts, how to harmonize retirement savings with other financial priorities, and the importance of tax diversification in an investment strategy. Their discussion covers the tax benefits of traditional and Roth 401(k)s, IRAs, and HSAs, and the importance of balancing retirement contributions with immediate financial needs like debt and emergency funds. In their conversation, the Nerds discuss: retirement savings, investment fees, Roth 401(k), traditional 401(k), expense ratios, IRAs, retirement planning, maximize returns, minimize fees, financial planning, nest egg, investment strategies, tax diversification, employer match, retirement accounts, mutual funds, exchange-traded funds, passively managed funds, actively managed funds, FINRA Fund Analyzer, tax benefits, contribution limits, debt management, emergency funds, capital gains, tax-free withdrawals, tax implications, asset allocation, rebalancing your portfolio, tax season, pre-tax contributions, and after-tax contributions. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:25.3	Prime Video.
0:27.1	Click or tap the banner to find out more.
0:29.9	Hey, Sean, you ever feel like the world of investing is full of overly complicated vocabulary?
0:36.3	Yes, all of the time.
0:38.2	Okay, so I'm not the only one.
0:40.0	Well, this episode, we're going to make some of that language a little easier to understand.
0:47.7	Welcome to Nerd Wallet's Smart Money Podcast, where we help you make smarter financial decisions,
0:52.8	one money question at a time. I'm Sean Piles.
0:55.4	And I'm Sarah Rathner. This episode, Sean and I answer a listener's question about how to choose
1:00.2	between investing in a Roth versus a traditional 401k account, including when the Roth route might be
1:06.1	better. But first, we're going to help you understand another part of the investing world by doing a
1:10.7	little segment that we're calling nerdy vocab.
1:13.2	The idea is that we take a term that seems made up by an AI chatbot or a stodgy finance person and make it a little more accessible.
1:21.2	Honestly, it was probably made up by a sodgy finance person.
	...

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