Uncomplica​ted Wealth Building for Beginners: Money Buckets

If the company you work for does not match your 401k retirement contributions, or if you have already contributed up to the maximum match of your company, the next tool to wealth building is called IRA or Individual Retirement Account. An IRA can be opened very easily with companies like Vanguard or Fidelity. An IRA is called a Roth IRA when we pay the taxes up front and put aside the money for growth, without paying taxes again on the principal and earnings. The annual limit to a Roth IRA is 5500$ and if the money is placed for atleast 5 years in this account, one can always pull out the principal without any issue. On the other hand 401K is much more restrictive in being able to access money before the age of 60.

Again note that in the US, the mutual funds are the main instruments needed to grow wealth from savings. So whatever be the money bucket, the money needs to be eventually invested into low cost, low expense ratio mutual funds!