Chapter 6.3, Problem 2R

To determine

To state: The advantage of each term given in the table.

Explanation of Solution

Investment method	Advantage
Pension plan	Such schemes invest in the long term, a person's investment will receive the benefits of long-term investment. Pension schemes ensure that a strong corpus is accrued by the time someone retires and generates an annuity that will provide a stable cash flow after retirement.
Keogh plan	Keogh plans offer small entrepreneurs and even some employers’ tax-favored retirement accounts. Small business employers can also subtract the contributions made to their workers.
IRA	The primary advantages of adding to the IRA are tax deductions, tax-deferred or tax-free earnings development and, where an individual is eligible, non-refundable tax credits.
Roth IRA	Roth IRAs offer a range of main benefits, including tax-free growth, tax-free retirement withdrawals and no required minimum distributions.