(e) Exchange-Traded Notes (ETNs)
It is an unsecured debt security that is designed to provide returns as per the performance of an individual commodity, currency or index. They have a specified maturity date up to 30 years or more.
They posses counterparty risk i.e. creditworthiness of the backing institution can adversely impact the value of ETN even when the underlying index is performing well. ETNs don’t pay dividends or annual coupons.
[Read Also: 20 Great Reasons To Invest Money In Stock Markets]
(7) Individual Retirement Accounts (IRAs)
It is one of the most popular & best retirement investment options. It is provided by a number of financial institutions that provide tax benefits for retirement savings in US. IRA is an account where you can keep investments such as stocks, bonds, & mutual funds.
You can choose your favorite investments & can change those investments whenever needed. If you have a spouse, you will each have a separate IRA.
Some of the advantages of IRAs include growth of investments is tax-deferred & contributions may be deductible, & availability of wide range of investment options with different risk/reward characteristics. However, you have to face penalties along with income tax on early withdrawal.
There are several types of IRAs & you can have more than one type of IRA as long as you meet certain requirements. These IRAs are discussed below:
(a) Traditional IRAs
All transactions & earnings within traditional IRAs have no tax impact & withdrawals during retirement are taxed as income. However, anyone with earned income can contribute in it.
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