It is astounding to me to see how many finance articles online speak of Roth 401ks and IRAs as though they are a type of asset that you buy. Instead, it would be more accurate to say that it is a type of account with tax benefits and a few restrictions that you can use to purchase assets on more favorable terms. It is analogous to a contract with the government that gives the investments you make certain benefits so long as you comply with the Roth IRA rules and contribution limits.
Philosophically, all IRA accounts are about making a deal with the government. You are seeking tax benefits that allow you to compound your funds tax-free as long as your money remains in the account. Meanwhile, the government is seeking a guarantee from you that the funds will actually be used during your traditional retirement age so they … Read the rest of this article!