Need a little advice on "money investment" ie; Roth's, IRA's

[Sensia]

I have never been that good at determining where it is best to put my hard earned money. I now have a nice bit saved, and I am trying to determine where is a good place to save/invest it. I was thinking of a Roth account or something along those lines. But since this is not my area of expertise, I thought I would ask others here.

If anyone has any good advice or knowledge on such matters I would love the input.

[discreetgent]

A Roth account is just a vehicle to shield it from taxes, which for retirement is an excellent move. Most Roth accounts have many investment options and that is the key.

[Sensia]

Originally Posted by discreetgent

A Roth account is just a vehicle to shield it from taxes, which for retirement is an excellent move. Most Roth accounts have many investment options and that is the key.

I am wondering what the long term % rate is comparable to other types of investments. Is the Roth account only subject to taxes if broken? I am assuming yes. Any other investment venues that might make for a better place to put my money?

[discreetgent]

You pay taxes when you withdraw at retirement age, the assumption is that you will be in a lower tax bracket at that point and you accumulate over time without a tax burden. Long term % will depend on what investments you make within the Roth plan, the Roth plan in itself doesn't change that.

[Marshall]

Originally Posted by discreetgent

You pay taxes when you withdraw at retirement age, the assumption is that you will be in a lower tax bracket at that point and you accumulate over time without a tax burden. Long term % will depend on what investments you make within the Roth plan, the Roth plan in itself doesn't change that.

You are confusing a Roth IRA and a traditional IRA.....limit your advice to things you know.....let me take over and give the correct advice.......

With a Roth IRA you have to have earned income.....you pay taxes on the money you put in and take it out tax-free [tax free appreciation!].......

If you don't have an investor's disposition and at least 15-20 hours a week to research investments, then buy an index fund for your IRA.......

[pjorourke]

Originally Posted by discreetgent

You pay taxes when you withdraw at retirement age, the assumption is that you will be in a lower tax bracket at that point and you accumulate over time without a tax burden. Long term % will depend on what investments you make within the Roth plan, the Roth plan in itself doesn't change that.

No, in a traditional IRA, the contribution is excluded from income and what you take out in retirement is taxed -- hopefully at a lower rate. But the Roth is different. There is no deduction/exclusion from income for what goes in and what comes out is not taxable income (under current law).

[Marshall]

Originally Posted by pjorourke

No, in a traditional IRA, the contribution is excluded from income and what you take out in retirement is taxed -- hopefully at a lower rate. But the Roth is different. There is no deduction/exclusion from income for what goes in and what comes out is not taxable income (under current law).

You're a little late, I already cleaned up DG's messy advice..........

[Guest032213-02]

Your Mattress. Won't make any money, but keeps it safe, and if an emergency pops up(i.e. your next appointment), there it is!

[pjorourke]

Originally Posted by Marshall

You're a little late, I already cleaned up DG's messy advice..........

Life intruded before I could hit enter.

[gulflover]

There are also limits to the amount you can contribute that depend on age and whether or not you're self-employed. If self employed, you can contribute a good deal more to a self-employed retirement plan (SEP). Whoever you invest with should be able to tell you what limits you're facing.

[atlcomedy]

before you get into all these plans (& as some have alluded to indirectly), is this money you may need in the short term?????

the conventional wisdom seems to be keep at least 2-3 months of expenses in something liquid like a savings/checking account even if the return is small.

on the otherhand if it means eating Ramen Noodles never pass up a company match if it is significant

[discreetgent]

What they said, appreciate the correction.

[Guest102513-1]

Also, if memory serves me correctly, in either Roth or IRA...if you take out ANY money before retirement age, some of that becomes taxable plus a 10% penalty.

I would suppose any post-tax contributions would not be subject to income tax, if you withdraw early...i.e. Roth contributions??

[I B Hankering]

Originally Posted by vkmaster

Also, if memory serves me correctly, in either Roth or IRA...if you take out ANY money before retirement age, some of that becomes taxable plus a 10% penalty.

I would suppose any post-tax contributions would not be subject to income tax, if you withdraw early...i.e. Roth contributions??

There is a 10% penalty on the amount withdrawn on an IRA before age 59.5. I am not sure about Roth accounts.

[gulflover]

Originally Posted by I B Hankering

There is a 10% penalty on the amount withdrawn on an IRA before age 59.5. I am not sure about Roth accounts.

They exist on Roth accounts too, except you can subtract your basis in the account from the withdrawal. I can personally attest to that one (the account had lost a little bit of money from what was put in and I paid no taxes).

There are 11 exceptions to the early distribution penalty, only 4 of them are at all common. I got to use 3 on one tax return this year, which was exciting to me.

But yes. When the feds say don't withdraw before 59 1/2 they mean it. If you are going to set aside, make sure you won't ever ever need that money for anything other than a medical catastrophe or college or to buy a house for the first time (3 of the exceptions).