In some ways, Roth IRAs work similarly to regular brokerage accounts, but they have very different tax treatments.
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Roth IRAs have tax advantages that make them useful for long-term savings goals such as retirement or, in certain cases, first-time home purchases. Brokerage accounts have fewer rules and more flexibility around when and why you can withdraw profits from them.Roth IRAs vs. brokerage accounts: the major differences
: There is no short-term tax incentive for putting money into a Roth IRA or brokerage account. Traditional IRA contributions may be tax-deductible, but Roth IRA contributions, like brokerage account contributions, are not.Investors can withdraw the amount they’ve contributed to a Roth IRA tax-free and penalty-free at any time. There’s also no penalty to withdraw money you’ve put into a brokerage account .
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