Individual Retirement Account (IRA)
An investment account where an individual can contribute a specified amount of his or her income each year, intended to be set aside for retirement. The contribution is usually deducted before taxes and is therefore not reported as taxable income and remains so until retirement. One’s income is usually lower at retirement, so lower taxes are usually imposed once the funds are withdrawn. Depending on the amount of contributions during working years, one may also put themselves in a lower tax-bracket.
Interest
1. The cost of borrowing money, usually expressed in a percentage rate that is charged/accrued in cycles (See also Annual Percentage Rate). 2. The percentage of ownership in a company.
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