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04-22-2011, 06:27 AM
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#1
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Account Disabled
User ID: 6814
Join Date: Jan 8, 2010
Location: SW Houston
Posts: 2,502
My ECCIE Reviews
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Need a little advice on "money investment" ie; Roth's, IRA's
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.
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04-22-2011, 06:33 AM
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#2
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Valued Poster
Join Date: Dec 31, 2009
Location: Even with a gorgeous avatar: Happiness is ephemeral
Posts: 2,003
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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.
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04-22-2011, 06:37 AM
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#3
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Account Disabled
User ID: 6814
Join Date: Jan 8, 2010
Location: SW Houston
Posts: 2,502
My ECCIE Reviews
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Quote:
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.
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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?
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04-22-2011, 06:45 AM
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#4
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Valued Poster
Join Date: Dec 31, 2009
Location: Even with a gorgeous avatar: Happiness is ephemeral
Posts: 2,003
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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.
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04-22-2011, 08:04 AM
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#5
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BANNED
Join Date: Mar 14, 2011
Location: Wild Wild West!
Posts: 1,556
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Quote:
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.
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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.......
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04-22-2011, 08:10 AM
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#6
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Valued Poster
Join Date: Dec 23, 2009
Location: gone
Posts: 3,401
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Quote:
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.
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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).
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04-22-2011, 08:34 AM
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#7
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BANNED
Join Date: Mar 14, 2011
Location: Wild Wild West!
Posts: 1,556
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Quote:
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).
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You're a little late, I already cleaned up DG's messy advice..........
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04-22-2011, 08:42 AM
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#8
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Account Disabled
Join Date: Apr 27, 2010
Location: Plano
Posts: 392
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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!
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04-22-2011, 09:00 AM
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#9
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Valued Poster
Join Date: Dec 23, 2009
Location: gone
Posts: 3,401
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Quote:
Originally Posted by Marshall
You're a little late, I already cleaned up DG's messy advice..........
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Life intruded before I could hit enter.
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04-22-2011, 02:31 PM
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#10
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Valued Poster
Join Date: Nov 17, 2010
Location: Elberta, AL
Posts: 456
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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.
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04-22-2011, 02:50 PM
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#11
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Valued Poster
Join Date: Apr 5, 2009
Location: Eatin' Peaches
Posts: 2,645
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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
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04-22-2011, 04:03 PM
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#12
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Valued Poster
Join Date: Dec 31, 2009
Location: Even with a gorgeous avatar: Happiness is ephemeral
Posts: 2,003
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What they said, appreciate the correction.
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04-22-2011, 05:29 PM
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#13
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Account Disabled
Join Date: Jan 24, 2010
Posts: 3,039
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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??
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04-22-2011, 06:53 PM
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#14
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Valued Poster
Join Date: Jan 3, 2010
Location: South of Chicago
Posts: 31,214
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Quote:
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??
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There is a 10% penalty on the amount withdrawn on an IRA before age 59.5. I am not sure about Roth accounts.
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04-22-2011, 08:30 PM
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#15
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Valued Poster
Join Date: Nov 17, 2010
Location: Elberta, AL
Posts: 456
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Quote:
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.
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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).
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