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Roth IRAs!

Mschmeiske

Mschmeiske

Well-Known Member
SH Member
Joined
Sep 4, 2017
Messages
1,950
Location
New York
Who has experience with Roth IRAs and what can you tell me about them? I’ve been self employed all my life and have never punched a clock. Now I know that sounds great, and in some ways it is, but it does have its down falls... so I’m trying to figure out some ways to invest, etc...

Any feedback or personal experiences would be great!
 
Feel free to hit me up if you would like some info. In a previous life I was a Financial Advisor for Edward Jones. There are many things to take into consideration with your specific situation being self employed that play a larger factor than just paying taxes now versus later.


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Squirrels said:
Feel free to hit me up if you would like some info. In a previous life I was a Financial Advisor for Edward Jones. There are many things to take into consideration with your specific situation being self employed that play a larger factor than just paying taxes now versus later.


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Click to expand...
Yep. Get a financial advisor you trust. Luckily one of my best friends is a financial advisor. The wife and I have almost all of our retirement in Roth’s.
 
Don't let anything get in your way of starting ASAP. Vanguard is a popular institution for this. Call them and set up once-a-month automated deposits from your bank account. There is a yearly limit if you're under 50 of $6000. So send them yourself $500 a month or as much as you can handle. Also FYI you may NOT be eligible for a Roth if your yearly income is above $124000 (or $196000 filing jointly).

Open an IRA account in 3 easy steps | Vanguard

Open an IRA online, and get help choosing the type of IRA and investments that are right for you.
investor.vanguard.com investor.vanguard.com

Once your funds at the institution reach a certain amount (the minimum investment) you can put it into a mutual fund or some other investment vehicle. You should do some research to decide what's right for you, but for example here are some popular ones:

VTSMX
VFINX
VIGRX
VWELX

You've already paid taxes on this money and inside the Roth your gains are tax free. Here is a more in-depth explanation of how taxes work.
 
sureshotscott said:
Don't let anything get in your way of starting ASAP. Vanguard is a popular institution for this. Call them and set up once-a-month automated deposits from your bank account. There is a yearly limit if you're under 50 of $6000. So send them yourself $500 a month or as much as you can handle. Also FYI you may NOT be eligible for a Roth if your yearly income is above $124000 (or $196000 filing jointly).

Open an IRA account in 3 easy steps | Vanguard

Open an IRA online, and get help choosing the type of IRA and investments that are right for you.
investor.vanguard.com investor.vanguard.com

Once your funds at the institution reach a certain amount (the minimum investment) you can put it into a mutual fund or some other investment vehicle. You should do some research to decide what's right for you, but for example here are some popular ones:

VTSMX
VFINX
VIGRX
VWELX

You've already paid taxes on this money and inside the Roth your gains are tax free. Here is a more in-depth explanation of how taxes work.
Click to expand...
If you’re over the limit you can open a Solo 401k. It works like a regular 401k, you get the tax break upfront but have to pay taxes upon withdrawal, which may or may not be advantageous depending on your income now versus expected income after retirement. I’ve been funding one for 14 years since I started my technology consulting LLC.
 
I agree with starting sooner than later. Time is the biggest factor in investing, see “compound interest”

An advisor is good, I recommend it. They can let you know what type of accounts you should open. Your bank may offer some of this “for free”. Just be careful that they maybe incentivized by an investment company.

When investing, watch out for fees. Some funds will charge more fees than others to “manage”. Places likes Vanguard have lower fees. American funds is good too. Just look for “index funds”. Those will have lower fees.

the robo investing apps are ok, but I wasn’t liking it as much as my American Funds account.
 
swampsnyper said:
Buy land.
Click to expand...

there’s a fund for that!

I don’t disagree though. I like owning some property but when it comes to investing I would rather invest in land by investing in funds that are related to real estate. I live in Massachusetts, where land is ridiculous, so my logic doesn’t apply everywhere. Not that I couldn’t buy land somewhere else.
 
Sometime maybe check out the Bogleheads philosophy / ideas.... https://www.bogleheads.org/wiki/Getting_started
The idea is that simple low maintenance diversified portfolio that is appropriately allocated by your age mathematically outperforms most expert fund managers over the long term. It’s not sexy but it’s backed up by analysis. Execution within the Roth would just be picking several funds / ETFs to track broad markets, and then let it run.
 
pesqimon said:
I agree with starting sooner than later. Time is the biggest factor in investing, see “compound interest”

An advisor is good, I recommend it. They can let you know what type of accounts you should open. Your bank may offer some of this “for free”. Just be careful that they maybe incentivized by an investment company.

When investing, watch out for fees. Some funds will charge more fees than others to “manage”. Places likes Vanguard have lower fees. American funds is good too. Just look for “index funds”. Those will have lower fees.

the robo investing apps are ok, but I wasn’t liking it as much as my American Funds account.
Click to expand...
Dollar cost averaging. The sooner you start making the snowball as you're going down the hill the bigger it gets at the bottom!!!
 
A diversified portfolio is the absolute key. I liked swampsnyper's recommendation on a land investment too. Especially one with saleable timber on it that can be managed for sustainable regeneration and more frequent but less impactful harvests. You hear of so many people getting land and then clear cutting it. Then they wonder why they die before they get another harvest. Ideally, and with the right forester, you can get great harvests every 10 years and depending on the diversity, quality and annual new growth, some places can have harvests every 7 years. In my opinion good land is one of the greatest investments because it is a finite resource (for the most part) and therefore increases in value. All land could be valuable if you could figure out how to sell people volcanos and live in swamps but there is a lot of money in the world now and some deer hunters may just want a swamp too!!!!
 
Vanguard is definitely a good option, low fees. The highly “managed” and often expensive options rarely outperform a simple index fund.

As others stated, with a Roth IRA your paying taxes up front. This raises your annual taxable income but the obvious advantage is enjoying tax exempt withdrawals in the future.

Pros and cons to both standard (tax deferred) and Roth IRA’s.

Bottom line, do some research and start ASAP.


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i think when it comes to investing, a good solution now is better than a great one later. You can tweak things as you go, as you learn more. Which is not to say you can’t make bad investments, so don’t rush into it either.
 
woodsdog2 said:
A diversified portfolio is the absolute key. I liked swampsnyper's recommendation on a land investment too. Especially one with saleable timber on it that can be managed for sustainable regeneration and more frequent but less impactful harvests. You hear of so many people getting land and then clear cutting it. Then they wonder why they die before they get another harvest. Ideally, and with the right forester, you can get great harvests every 10 years and depending on the diversity, quality and annual new growth, some places can have harvests every 7 years. In my opinion good land is one of the greatest investments because it is a finite resource (for the most part) and therefore increases in value. All land could be valuable if you could figure out how to sell people volcanos and live in swamps but there is a lot of money in the world now and some deer hunters may just want a swamp too!!!!
Click to expand...

Southern pine plantation timber was an excellent investment from the 90’s through mid 2000’s. A saturated market and poor pulpwood markets make timber, like any other commodity, somewhat risky. The other downside is that recreational activities (hunters!!!) have driven land prices so high that it’s hard to find a profitable timber track.

Timber markets are also very regional. Tulip poplar is a junk tree in most areas but brings top dollar in western NC where we own land. Terrain (access to timber) and distance to the mill are major factors when you determine worth of a specific property.

Hardwood and pulpwood markets change, it’s hard to predict where they’ll be in 5+ years. The bonus of owning land is obvious for us...hunting! In many parts of the country, your land is worth more managed as a hunting property than if it was managed for timber. Of course, that could change as well.


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