Question

Joe decides that he will contribute $5,000 a year to his 401(k) plan when he starts saving for retirement. What is the best action Joe can take to ensure that his money will grow the most before he retires?

a Choose risky stocks with a high return.
b Put the money in an IRA instead.
c Invest the funds as early as possible.
d Use the money to pay down his mortgage instead.

Answer 1

I feel that the answer would be C as that would give it the most time to grow and build, but I have heard many times that IRA's can be better as far as tax. I would go with C, unless your class has specifically been leaning about IRA's.