TYLER — The country's downgraded credit, along with tough economic times, is leaving doubt on many American's minds where to invest their money. For some, investing in a 401K plan for retirement reasons, is fitting, but for others who need money in the short term for emergency situations or for down payments on big ticket items, a savings account is key.  However, according to one local financial advisor, having both is the way to go.

 Types of ways to invest:

Savings Account- on demand account, at a bank, where deposits are made and interest is gained in return, good accessibility. (savings are at an almost 0% interest rate right now)

401K- provided by an employer, designed to be there in retirement, tax code penalizes for withdraws before 59 1/2 years old. (when withdrawn in retirement years, it's taxed at current income tax rate at the time)

IRA- individual retirement account.

ROTH IRA- an individual retirement account with tax free withdraws.

***ROTH IRA example: $1,000 invested into a ROTH IRA, that became $5,000 by retirement, could be withdrawn with no tax liability.
 

Watch the video above for the full story.

Jessica Wilson/ KETKnbc.com