Would this be an ok place to ask about Roth IRA? Looking to start mine up, not sure if I should go through my bank (where my direct deposit from work goes), or to a “private” broker/firm/advisor. Any help is appreciated. Ps. As green as green can be when it comes to dividend investing. Would also really like to know more about it’s potential.
Nandy Colon: I hate IRA. Make me wait until 59 1/2 to use my money no thanks. Instead I invest heavily in a taxable account and get to enjoy retirement way sooner!
Donnie Mendoza: What about doing both??
Donnie Mendoza: Diversification, if you may..
Nandy Colon: Donald Mendoza no no and no. Why work all your life until 59 1/2 to then use your money? Forget that instead I’m retiring way sooner. This has nothing to do with diversification.
Donnie Mendoza: Rake me to school then man, that’s why I posted
Rui Loura: Just withdraw your contributions if you want to retire early. Then withdraw profit at 59.5.
Rod Seller Rodriguez: I am with Nandy. The sooner I can retire the better .
Mike Dodge: Obviously the benefit of the roth is that all contributions, gains, and dividends are not taxed when you start withdrawing. All of it grows tax free! But if you can afford to retire before 60, then a taxable account might be the way to go.
Robert Bartlett: So you dont plan on spending any money after your 59 1/2? That’s fascinating.
Rui Loura: Taking up skydiving, bungee jumping, pipe smoking, and race car driving at 55… 😉
Robert Bartlett: Funny people are opposed to ROTHs like they wont need income after age 59 1/2 also. ROTHs are great products, so is investing in a taxable brokerage account. Isnt like you can shove 50k a year in a ROTH anyways.
Nandy Colon: Robert Bartlett I’m 31 and can retire easily at 35 if I wanted too but if I put myMoney in a IRA it will delay my retirement and have to wait until 59 1/2 to use is not hard to figure out what is best for me but if someone can’t afford it then to each their own
Robert Bartlett: Do you know how much you’re limited to putting in a Roth each year? Not enough to retire by 35 I assure you.
Donnie Mendoza: What are your other options then, Nandy?
Adam Fried: Nandy Colon, first off, congrats on being able to retire by 35, must be a hell of a job you got…second, if you’re making that kind of bank, chances are you aren’t able to contribute to an ira anyhow since you can’t contribute above a certain agi…bu…See more
Donnie Mendoza: So anything you put in is free to take out, after 5(?) Years?? With no penalties??
Kevin Carpenter: Robert Bartlett I was asking myself the same question… then I thought I was just tired and missing something 😂😂😂
Adam Fried: Donald Mendoza, you can’t take out the gains after 5 years, but you can take your contributions out at ANY time, since they were originally funded with after tax dollars. If you put in say 5k in year one, you can take out that 5k if you need it at any time, even the next day, with no penalties. You just can’t take out any GAINS made on that 5k
Robert Bartlett: Exactly ^^^ that.
Donnie Mendoza: That’s great to know. Thanks guys
Robert Bartlett: Kevin Carpenter, Nandy seems to have more money than financial knowledge. Wish I had that same problem.
Donnie Mendoza: I started to see that as the case, doesnt come from the same cloth as I, so I cant realistically use his advice.
Rui Loura: Adam Fried you can ALWAYS add up to $5500/year to a Roth IRA regardless of AGI. It’s called a backdoor Roth IRA.You make a non-deductible Traditional IRA contribution, then you roll that over to a Roth….See more
Adam Fried: Rui Loura, that’s getting a little technical for a newbie, as Donald claims he is, but I hear you…
Rui Loura: Just learned that recently… so wanted to spread the knowledge.
Donnie Mendoza: What’s the max AGI to be able contribute into a Roth?
Adam Fried: Donald Mendoza, Roth IRA Income Limits for Married Filers (Joint) If you file as married filing jointly or as a qualifying widow(er) your MAGI must be less than $186,000 to contribute up to the limit. If your MAGI falls between $186,000 and $196,000 you cannot contribute up to the limit. Your contribution is reduced.
Donnie Mendoza: Ooof…im a few years from that number haha
Nandy Colon: Adam Fried because my gains and dividends are the one funding my retirement in the next years. I had an IRA when I started investing and learn all the rules that comes with it but after learning more about the cons and getting to meet some great peopl…See more
Donnie Mendoza: What do you mean taxable account? Sorry that means nothing to me at the moment lol
Nandy Colon: Donald Mendoza account where you pay taxes at the end of the year for your gains and dividends.
Donnie Mendoza: So a traditional ira
Nandy Colon: Donald Mendoza no there are differences between both
Nandy Colon: Donald Mendozahttp://www.rothira.com/traditional-ira-vs-roth-ira
Traditional IRA vs. Roth IRA: Understand the Differences | RothIRA.com
Keith Kopets: I am in my mid-40s and completely retired (except for managing my assets). I’m still funding my Roth IRA. It is one of the greatest financial vehicles allowed by the US government. You fund it with post-tax money, it grows tax-free, and there are no ta…See more
How to Use a Roth IRA to Avoid Paying Estate Taxes | RothIRA.com
Ryan Brabson: Try a Charles Schwab index fund to start – low fees if you are not into picking your own stocks.
Mark James: A roth is the right way to go (of the two kinds). Is work contributing into your ROTH, or is that just where the checks come to as far as paychecks go? No taxes (ever) on earnings in the account. I love mine.
Donnie Mendoza: They will match up to 6% into a 401k not a Roth.
Donnie Mendoza: I will be doing 401k as well
Donnie Mendoza: Paycheck goes to my local citizens bank. They offer Roth ira and traditional
David Linnell: Go through an online broker like Fidelity, ameritrade or Schwab. Once funded then you can decide what to put it in.
Jimmy Leclair: Through a bank you will likely place your funds in a CD, which is FDIC insured so you won’t ever lose money on your investment, you will however not find the interest rates all to derivable in this current environment.
Steve Porter: Take advantage of both Roth and traditional. Roth you are not taxed when you withdraw (59 1/2 at the earliest) and traditional all deposits are tax deductible and taxed when withdrawn. So pay now or later, one school of thought is just pay now (Roth) as tax futures are unforseen.
Mark James: Once you Max out in one IRA account, you don’t get to keep contributing to the other. AS IT STANDS NOW, there are no taxes on the ROTH.
David Linnell: Never go through a bank. They will charge you fees for every little thing plus you will have fewer choices.
David Linnell: You can set up auto deposits with any broker. Don’t let them use that as a reason to go through them
Robert Bartlett: Set up a ROTH but not through a bank. Fidelity, Vanguard, Schwab etc
Adam Fried: Donald, the best thing to do is set up the roth through an online brokerage like td or fidelity, and make sure to choose drip (dividend reinvestment plan), so your dividend payouts buy more stock in that company, thereby compounding your interest. If you have a matching ability in a 401k at work, max that out AT THE VERY LEAST to the max of the match, that’s free money, and where I come from, you’d be a fool to throw out free money. Most places have a roth 401k option, although the matching portion will almost certainly be in a traditional instead of a roth, but don’t worry about that. You keep stocking away and you’ll be fine for retirement
Donnie Mendoza: Just hit 25, have a 2 year old…need to get the ball rolling.
Donnie Mendoza: These pesky dividends are next on my to do list
Adam Fried: Donald Mendoza, first thing is to do the roth 401k with at least as much as your company will match, that’s just free money there…after that, it’s up to you, either keep putting in the roth 401k where you can pick a dividend heavy mutual fund option, or start a roth ira and pick your stocks yourself and activate the drip plan, so it keeps buying more stock with each dividend payout
Donnie Mendoza: Interesting stuff, and a lot of it is just jargon to me. So at first ineant to find a place that understands what you guys do and make a decision with me in mind, with my money. Lol
Donnie Mendoza: Until I muster up the courage to make my own choices, choosing where to out my money, I’d like to leave it to the pros
Adam Fried: Donald Mendoza, go into a fidelity or td ameritrade branch and sit with a licensed broker who will explain it all to you and can help you walk through the steps
Donnie Mendoza: Thanks again, man.
Adam Fried: No problem. Anytime you have a question, hit me up. I used to be a financial planner for Merrill lynchs high net worth group. Also sold insurance for prudential, and finally was an institutional bond trader for a small boutique firm on wall street, before I got out of the industry
Donnie Mendoza: Why did ya bounce from it??
Donnie Mendoza: Sent pm, to be able to reach out in the future.
Donnie Mendoza: Might be in your seperate message request folder
Adam Fried: I’ll take a look…i got out because I was injured during 9-11 (three broken ribs, torn rotator cuff, bruised spleen, concussion, shattered ankle, sprained elbow, multiple cuts and bruises, etc.), and my boss insisted on keeping the office in our current location, which was next to ground zero, didn’t need the constant reminders
Adam Fried: At the time, my wife graduated law school and got a good job, so I left to go to culinary school.
Donnie Mendoza: Damn dude, I guess I don’t blame ya! Thanks for the help and the offer to continue giving advice
Adam Fried: No problem, glad to pay it forward
Donnie Mendoza: That’s what the world is about. Thank you, kindly
Donnie Mendoza: Message is there. Look forward to bugging the Hell out of you soon enough haha
AJ Singh: I started one about 10 years ago and contributed into the ROTH $5500 a year investing in divided paying stocks and using the DRIP system and the divided have compounded nicely with stocks doing great. It’s an amazing tool if you use it right and max it every year if you can as the fund when withdrawn after 59 1/2 is all tax free as long as you have had your ROTH for atleast 5 years. Make sure to research some good dividend paying companies to invest in and use the DRIP system so you’re not paying fee to buy stocks.
Donnie Mendoza: Definitely will
Jackson Fabros: Curious on what bank/platform youre using?
AJ Singh: Jackson Fabros etrade for Roth and fidility.
Peggy Morton: What is the DRIP system? can you provide a link?
Jackson Fabros: Dividend reinvestment program. Any divs received are automatically reinvested
Greg Williamson: Pam, here are some ROTH IRA discussions, I think you mentioned a Simple IRA though.
Mike Ramsey: The decision on how to spread your funds between a Roth IRA, conventional IRA, taxable accounts, and any employer-based accounts (401K, etc) can be complicated. A lot of it depends on how your current tax bracket compares to the bracket you anticipate for retirement, and your investing style also plays a part. You can’t go too far wrong with either IRA – the thing to avoid, in terms of taxes, is racking up a lot of short-term capital gains in a taxable account.