Post #9 Roth IRAs vs Traditional
HappyFriday everyone! Today we are talking about IRAs.
Do you like taxes... then a Traditional IRA is the way for you.
Do you HATE TAXES... then a Roth IRA is the way to go!
Here is what is the same. In 2019, the limit per year to contribute is going up to $6,000!!!!! And if you are over 50, $7,000!!! In your Traditional IRA, you write off contributions every year, but will pay HEAVY TAXES down the road when you take out the money. If direct rolling a 401K, this is a good option.
In a Roth IRA, you can’t write it off, ( you pay taxes now) then pay NO TAXES LATER!!!! WIN!
Both have penalties that apply if you take out money before age 59 1/2. Though there are a few exceptions.
The income limit is a modified adjusted gross income of over $199,000 filing jointly, however there is a 100% legal way to get around this, called the BACKDOOR Roth IRA. If you make over that amount, check this option out.
Once again the fund in these accounts should mimic the S&P500. Check out Vanguard or Fidelity for Roth IRA’s.
See you next week where we will talk about mutual funds.
Suggested Podcast: The Money Tree Investing Podcast 7 Dec 2018 Episode
Suggested reading: Random Walk Down Wall Street by Burton Malkiel #financefridays #investing #sp500 #longterm #dollarcostaveraging #RothIRA #IRA #vanguard #fidelity #themoneytreeinvestingpodcast #johnbogle #FI #retirement #finances
Disclosure: I am not a certified financial advisor nor do I have a degree in finance. Please do your own research and consulting to see what financial products are right for you.