Mutual Funds Are Democratizing Investment Access And Facilitating Retirement Savings

Mutual funds have stood the test of time, helping investors to reach their retirement goals for decades. These products, which first came on the scene in the U.S. in 1924, have leveled the playing field, giving investors across wealth statuses an opportunity to participate in the global financial markets thanks to features like diversification and cost efficiency.  

Mutual funds are baskets of assets in which investor capital is pooled to buy securities like stocks or bonds that are aligned with a fund's strategy. Mutual funds may include anywhere from a couple of dozen to 1,000 securities and beyond. As a result, they provide greater diversification across regions and asset classes than most investors can achieve on their own for a lower cost than would otherwise be possible. 

Thanks to mutual funds, building retirement savings is no longer reserved for high-net-worth individuals and instead is possible for ordinary people. One way to capitalize on the benefits of mutual funds for retirement is by investing in them through vehicles like Individual Retirement Accounts (IRAs). 

It's not uncommon for IRAs to offer investors the option to invest in mutual funds either through a broker, a self-directed account or directly with the fund company.  

IRAs allow you to invest for your retirement without the need for an employer-sponsored plan. They are popular for their features like tax-deferred growth and flexibility around withdrawals, all of which are especially important around retirement age. But it's never too early to begin saving for retirement, and investors have been flocking to both mutual funds and IRAs of late.  

As of year-end 2023, total U.S. retirement assets reached $38.4 trillion, an increase of 12.4% year-over-year, according to the Investment Company Institute. Among investment vehicles, IRA assets represented the largest cohort of retirement assets at $13.6 trillion, up nearly 8% from Q3 2023. At $5.8 trillion, close to half (43%) of IRA assets were directed into mutual funds at the end of last year.  

At Axos Invest, investors can access over 3,000 no-load mutual fund products with no minimum investment required.  

Axos Invest Offers Mutual Fund Investing Through All Types of IRA

At Axos Invest, investors can harness advanced investing tools, including mutual funds that can be purchased for IRAs. Depending on the fund, investors can allocate assets into funds comprising multiple securities that are modeled with their retirement goals in mind. The AxosFundFinder also helps investors sift through mutual funds and ETFs to find what works best for them. 

Axos offers IRA accounts that can meet any investor's needs, whether you're looking for a Roth IRA, Traditional IRA or Rollover IRA. Below is a list of some of the benefits associated with each type of IRA account:  

Roth IRA

One of the key features of a Roth IRA is that it allows you to invest in products like mutual funds using post-tax money. As a result, you won't have to worry about paying taxes on the money again when you need it the most – when it comes time to make withdrawals at retirement. 

The amount you're allowed to invest into a Roth IRA each year is limited to between $7,000 and $8,000, depending on your tax filing status and income. Upon meeting certain conditions, withdrawals can be made at any time without having to pay penalties or taxes. 

Traditional IRA 

A traditional IRA is a type of retirement plan in which investors contribute pre-tax money, allowing them to enjoy tax benefits sooner rather than later. Contributions are made on an after-tax basis but are not limited by income brackets. Funds may be tax deductible for investors who meet certain income requirements in the current tax year. 

IRAs have many options, as you can also convert a traditional IRA into a Roth IRA if your circumstances change. One reason to do so is if you're expecting to be in a higher tax bracket by the time you are ready to retire than you are now. 

Rollover IRA  

If you're looking to move funds from a former employer-sponsored retirement plan like a 401(K), Axos Invest also supports IRA rollovers. The balance you roll over into your new IRA won't count toward the government's contribution cap.

Featured photo by Tumisu on Pixabay. 

This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.