Remember, the account holds the investment- it is not the investment!

Remember, the account holds the investment- it is not the investment!

Many times people will conflate the type of account with the underlying investment. It is key to remember that an account is simply the container that you put investments (i.e. stocks and bonds) inside of.

That container (i.e. account) can have unique features that may encourage growth or make it more beneficial to withdraw value (i.e. money) from said container, but the container can only do so much.

Here is an analogy:

Halloween is only a few weeks away, and people will be sitting on their stoops with different candies in different bowls. If someone has a fancy bowl that is easier to grab candy out of than the house next door's, that is a big plus. You can really get a nice handful fast! But if that easy-access bowl is filled with dental floss and chap stick, is that a nice win? Not for the average 8-year-old! How about the house next door? What if they use an old-school fishbowl that is hard to get your hand into, but what you leave with is one king size Snicker's Bar. Now we're talking!

The point is that you have to invest well inside of the account. The account is just a tax wrapper, and the withdrawals, contributions, and growth will be subject to the rules of that tax wrapper. The account is very important (crucial even), but a powerful account filled up with cash is not as beneficial as a less advantageous account filled up with highly appreciating assets.

Remember, the account needs investments inside of it. Great performing underlying investments combined with a powerful account type can yield great results over time. There is no substitute for investing well, though, regardless of the "container".

Consult a financial professional for advice.

-Your Friends at Red Oak Financial Group