In this edition of our Motley Fool Conversations series, Fool personal finance expert Dayana Yochim and retirement planning analyst Dan Caplinger discuss the pros and cons of traditional IRAs. The most immediate benefit of using a traditional IRA is the up-front tax deduction that you get for the money you contribute, which can save you thousands in taxes on your current tax return. But that big benefit comes with a long-term trade-off: having to pay taxes on withdrawals after you retire.
Dan and Dayana go through strategies to use and rules to follow in making the most of your IRA. In addition, Dan makes some specific recommendations for stocks and other investments that fit best in an IRA, with a particular focus on high-dividend stocks and high-yielding bonds that will take best advantage of the tax benefits that these retirement accounts offer.
