Ramit Sethi: Retirement Accounts the Millionaire Loves That Advisors Might Steer You Away From
Written by
Vance Cariaga
Edited by
Cory Dudak
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
When somebody boasts about being “an actual rich guy” on X (formerly Twitter), you can either roll your eyes or check to see if he’s telling the truth. When that somebody is money expert and author Ramit Sethi, you don’t have to do much digging. Sethi is worth an estimated $25 million, according to Fortune, so he probably knows a thing or two about retirement accounts. And two of the accounts he loves are 401(k)s and Roth IRAs.
The founder of iwillteachyoutoberich.com and author of “I Will Teach You To Be Rich” said as much in a tweet last year:
“I love 401(K)s and Roth IRAs. Signed, An actual rich guy (Not an insurance salesman)”
As The Motley Fool reported at the time, Sethi sent the tweet in response to another tweet by an insurance company suggesting that “the rich avoid the 401k and Roth IRA like the plague.”
According to Motley Fool, Sethi has “made clear” he believes some advisors would steer you toward financial products that are not helpful in building wealth. His concern is that some advisors do this because “scammers can’t make commissions from your 401k.” The same can be said of Roth IRAs you buy on your own.
As previously reported by GOBankingRates, Sethi believes there are three main benefits to 401(k)s:
- It isn’t taxed until you withdraw it many years down the road, which means you have much more to invest for compound growth — to the tune of 25% to 40%.
- Some employers match your contribution, which means you get free money for investing.
- Your money is automatically invested so you don’t have to remember to do it yourself every month. Also, it can lessen the blow of having the money taken out of your paycheck.
As for a Roth IRA, Sethi wrote on his website that this is a good option because it uses your after-tax money to invest, giving you “an even better deal on your investment” than a traditional IRA.
“You’ll also pay no taxes on any gains when you withdraw from it,” he added. “There are currently no age restrictions on a Roth IRA; however, there are income restrictions.”
More From GOBankingRates
