If so, how much did you start with and how much do you put in per month? I'm thinking about starting one.
Do you have an IRA account?
- Thread starter imported_Tomato
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Queasy
Moderator<br>Console Gaming
- Aug 24, 2001
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I started out with the minimum for my account (I believe it was $500 at a time). Take the maximum amount that you can put towards an IRA a year and divide by 12. That's what you should put it in it per month if you can afford it.
Edit: Fobot is right about the 401(k). Put the max amount into the 401(k) that your company will match before you start an IRA or any other retirement fund.
Edit: Fobot is right about the 401(k). Put the max amount into the 401(k) that your company will match before you start an IRA or any other retirement fund.
Interesting. Can I do maintain both simultaneously? My job offers a 401k, but not until I've been with the company a year (July). I may move on at some point as well... what are the perks of a 401k over an IRA?
I make $30k/year right now... I guess I'll try to put in $100-200/month? That seems somewhat reasonable. I'll just stock up on P&B from Costco.
Queasy
Moderator<br>Console Gaming
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Yes, you can do both simultanesously.
Benefits of 401(k):
Money is put into it pretax so your taxable income is reduced.
Companies will usually match 50% of what you donate up to the first 6% of your salary. That's free money right there.
The only downside is that the money you take out of the 401(k) when you retire is taxable.
Go check out Motley Fool for 401(k) and IRA advice.
What's a Roth IRA?
I'm going to go check out MotleyFool now... thanks for all the info. As always, you are all a great help...
Originally posted by: Dezign
Yes, one more please.If I start with a traditional IRA, can I change it to a Roth without any (tax) penalties?
I think you'd have to pay a conversion tax. Guide to conversion
$500 to start and no contributions. Why contribute to something that is losing money? If this wasn't a gift to me, I would have found something better to put it in...
This is true for a Roth IRA but false for a traditional IRA.
And Dezign, you can still fund a year 2002 Roth IRA if you had income last year (up to $3,000) if you made at least that much), you have until 4-15 to do it.
From the advice I've received here and from the info from MotleyFool.com, I think I want to open up a Roth IRA. My father wants me to open up a traditional IRA though, and I'm still reading about the pros/cons.
TrueBlueLS, how is it "losing money?" And what would you put the money towards instead?
Queasy
Moderator<br>Console Gaming
- Aug 24, 2001
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You put money in it now because you'll get more back later. The money you put in a Roth IRA now buys stocks, mutual funds, etc when they are their cheapest. You don't wait to buy when everything is at its highest price.
Not to mention that this is a long-term investment for your retirement. The more you put in now, the better off you'll be in the end.
The max for an IRA used to be $2,000 but they might have upped it. Someone correct me if I'm wrong.
First off some very important advice:
Open up a Roth IRA. The difference between a regular IRA and a Roth IRA is this - With a normal IRA you do not pay tax on the principle (2,000 Max) but you do pay tax on the final account value when you break it open when you retire, which will probably be hundreds of thousands of dollars.
However, when you open a Roth IRA you pay tax on the principle ($2,000 Max) and you get the final value of the account (again, probably hundreds of thousands of dollars if you start early enough) totally free of tax!!! I hope you see the obvious benefits of the Roth IRA.
I have an IRA that I opened with $700 (I was only 18 at the time) and I continue to put money into it. However, note this, you can only add up to how much you earned in income that year. For a young person like me who might have >$2,000 (saved monies) but I don't earn much more than $1,000 a year (part time job) I can only put in $1,000 a year into an IRA.
I hope this information helped you. I'm lucky enough to have very financially smart parents who educated me on the benefits of compound interest early in my life ^_^
First off some very important advice:
Open up a Roth IRA. The difference between a regular IRA and a Roth IRA is this - With a normal IRA you do not pay tax on the principle (2,000 Max) but you do pay tax on the final account value when you break it open when you retire, which will probably be hundreds of thousands of dollars.
However, when you open a Roth IRA you pay tax on the principle ($2,000 Max) and you get the final value of the account (again, probably hundreds of thousands of dollars if you start early enough) totally free of tax!!! I hope you see the obvious benefits of the Roth IRA.
I have an IRA that I opened with $700 (I was only 18 at the time) and I continue to put money into it. However, note this, you can only add up to how much you earned in income that year. For a young person like me who might have >$2,000 (saved monies) but I don't earn much more than $1,000 a year (part time job) I can only put in $1,000 a year into an IRA.
I hope this information helped you. I'm lucky enough to have very financially smart parents who educated me on the benefits of compound interest early in my life ^_^
FeathersMcGraw
Diamond Member
- Oct 17, 2001
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A traditional IRA is a better choice if you are currently in a high tax bracket, as it reduces your current taxable income (at a high tax rate) in exchange for getting your retirement income taxable later (which, assuming that you're retired and living solely off of investment sources, will be at a comparatively lower rate). A Roth IRA is a better choice if you are currently in a low tax bracket, as you pay taxes on all your income (your contribution is in "after tax" dollars), but pay no tax on withdrawals at retirement.
You don't lose money until you start making withdrawals from your account -- and assuming you're as young as most people on ATOT are, that's not going to be for another 30-40 years, so the whole comment about losing money is not an intelligent one in the context of IRA investment.
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