Amanda Holden

The taxation of retirement accounts is probably the most misunderstood concept of investing.

And what I hate is that it creates this real roadblock to people getting started.

What we know is that tax law in the U.S.

is like this haunted patchwork doll that has been added to and amended over time.

And you can think of retirement accounts as just one cursed limb of the creation.

Because, of course, they had to make multiple different types of retirement accounts.

It couldn't just be simple.

Roth is the reverse.

You are paying income taxes up front, but later on, you won't have to pay any income taxes when you pull the money out.

If you are a higher earner right now, it may make sense to push those taxes until later when you're going to have a much lower tax rate in retirement.

If you're somebody that's not earning a lot right now, hey.

Go ahead and pay the taxes.

Give this gift to your future self and never have to worry about income taxes again on that money.

We can debate all day about whether Roth or traditional is better, but I think it obfuscates the point, which is that all retirement accounts are good because all of them allow you to grow your money tax-free.

Maybe the best thing we can do is give ourself a little bit of tax diversification and do some of both.

But the best thing you can do is not let it be a roadblock to getting started and just pick one and get to moving because the much more important thing is what is happening inside of those accounts and the investing happening inside of those accounts.