These Are the Two Retirement Accounts Ramit Sethi Loves

Are you investing in either of Sethi's favorite accounts?

When choosing what to do with your retirement investments, there are a lot of different kinds of accounts out there. If you're having a hard time deciding which ones are right for you, considering the advice of experts could be helpful.

Ramit Sethi is one expert worth listening to. The author of I Will Teach You to Be Rich recently tweeted about two retirement investment accounts he loves. Here's what they are.

The two accounts Sethi says are great options for retirement investing

"I love 401(K)s and Roth IRAs," Sethi tweeted, naming two kinds of retirement accounts that he believes retirement investors should look into.

Sethi sent the tweet in response to another comment made on Twitter by an insurance company that suggested "the rich avoid the 401k and Roth IRA like the plague." In response to this assertion, Sethi signed his tweet endorsing the 401(k) and Roth IRA from "an actual rich guy (not an insurance salesman)."

The finance guru's advice on this issue is important to listen to because it highlights a big problem. He's made clear that he believes some advisors would steer you toward financial products that aren't really in your best interest rather than toward accounts that can actually be helpful in growing your wealth. And he suggests that many unscrupulous advisors may do this because "scammers can’t make commissions from your 401k."

Should you listen to Sethi and invest in a 401(k) or Roth IRA?

Sethi is absolutely right in endorsing both the 401(k) and the Roth IRA as great investment options. And he's also correct that you should be wary of anyone who suggests these accounts aren't worth investing in while trying to sell you other financial products.

A 401(k) is a workplace retirement plan many employers offer. Contributions can be made with pre-tax dollars and are sometimes matched by your employer. These plans are extremely easy to contribute to because money is taken right out of your pay before you get your check, and you have a narrow range of safe investments to choose from.

A Roth IRA, on the other hand, can be opened with a brokerage firm you pick. Your employer doesn't need to help you get it set up, so you can use this account if you don't have a workplace plan. You will contribute with after-tax dollars, but you will be able to make tax-free withdrawals in retirement as long as you follow some basic IRS rules. You can also invest in just about any asset your brokerage offers.

Both of these accounts come with generous tax breaks and limited or no fees. They are widely recognized as some of the best kinds of investment accounts out there, and you should absolutely be taking advantage of one or both of them depending on whether you expect your taxes to be higher now (and are better off with the upfront tax break of a 401(k) or later in retirement (and are better off with the deferred tax break from a Roth IRA).

So, as Sethi said, don't listen to scammers who try to steer you away from them. Put your retirement money into the accounts the government incentivizes so you can watch it grow without unnecessary complications and fees.