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How To Invest In A Roth IRA For Beginners 2023 (Tax Free Millionaire)
In this video I will use the vanguard app to invest in my Roth IRA. We will look at my vanguard Roth IRA portfolio and the index fund that is inside of it. Vanguard index funds are a great way to fund your Roth IRA and set yourself on a course to becoming a tax free millionaire. This can be done because the Roth IRA is a tax advantage retirement account that grows tax free over time. It has no RMD’s and can be used for a first time home purchase as well as qualified education.
A Roth IRA (Individual retirement account) is a type of retirement savings account that allows individuals to set aside after-tax income for the purpose of saving for retirement. Contributions to a Roth IRA are not tax-deductible, but qualified withdrawals from the account are tax-free. This means that you pay taxes on the money you contribute to a Roth IRA upfront, but you do not have to pay taxes on the money when you withdraw it during retirement.
One of the key benefits of a Roth IRA is that it offers tax-free growth on your investments. This means that any earnings on your investments, such as interest, dividends, or capital gains, are not subject to taxes as they accrue. This can result in a larger balance in your Roth IRA over time compared to a traditional IRA or other taxable investment account, since you do not have to pay taxes on the earnings.
In addition to the tax-free growth potential, Roth IRAs also offer flexibility in terms of contributions and withdrawals. You can contribute to a Roth IRA at any time, as long as you have earned income and meet the eligibility requirements. You can also withdraw your contributions from a Roth IRA at any time without penalty, although you may have to pay taxes and penalties on earnings if you withdraw them before meeting certain criteria.
There are a few eligibility requirements for contributing to a Roth IRA. To contribute to a Roth IRA, you must have earned income and your income must be below certain levels. The amount you can contribute may also be limited based on your income and tax filing status.
Roth IRAs can be a useful tool for saving for retirement, especially for younger investors who have a long time horizon and expect their tax rate to be higher in retirement. They can also be a good option for individuals who want the flexibility to access their contributions if needed, or who want to leave a tax-free inheritance to their heirs. It is important to consider your financial goals and circumstances when deciding whether a Roth IRA is the right retirement savings vehicle for you. As with any investment, a Roth IRA carries some risks and it is important to carefully consider these risks and the potential impact on your financial situation before making any investment decisions.
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DISCLAIMER: The content discussed in these videos are solely my opinion and should never be used as financial advice. This channel is for entertainment purposes only. Make sure to consult with a professional before making money decisions. This video and description contain affiliate links, which means that if you click on one of the product links, I’ll receive a small commission; all of which helps grow the channel! Thank you for your support!
#RothIRA #Roth #IRA…(read more)
LEARN MORE ABOUT: IRA Accounts
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REVEALED: Best Gold Backed IRA
As you plan for retirement, you may be considering different investment strategies, such as traditional IRAs, 401(k)s, and taxable brokerage accounts. However, there is one investment vehicle that is often overlooked but could be the missing piece to your retirement puzzle: the Roth IRA.
The Roth IRA is a retirement account that allows you to invest after-tax dollars, meaning that your contributions will not be tax-deductible. However, when you withdraw the money in retirement, those funds are tax-free. This means that you can grow your retirement savings without having to worry about paying taxes on your withdrawals.
Another benefit of the Roth IRA is that there are no required minimum distributions (RMDs) when you reach a certain age, which is the case with traditional IRAs and 401(k)s. This allows you to keep your money invested for longer and potentially grow your savings even more.
Furthermore, the Roth IRA offers flexibility in terms of withdrawing funds early. While traditional IRAs and 401(k)s charge a penalty for withdrawing funds before age 59 1/2, the Roth IRA allows you to withdraw your contributions (but not earnings) penalty-free at any age. This can be especially useful if you need to tap into your retirement savings for unexpected expenses or emergencies.
Additionally, the Roth IRA can serve as a useful estate planning tool. If you pass away, your Roth IRA can be inherited tax-free by your beneficiaries, who then have the option to continue growing the account tax-free for their own retirement.
So, why is the Roth IRA often overlooked as a retirement savings option? One reason could be that many people are not aware of its benefits or how it works. Another reason is that people may not prioritize contributing to it due to the lack of immediate tax benefits.
However, if you have already maxed out your contributions to a traditional 401(k) or IRA and are looking for additional tax-free retirement savings, the Roth IRA could be the missing piece to your retirement puzzle. It offers unique benefits that other retirement accounts do not, and can help you achieve a tax-free retirement.
In conclusion, the Roth IRA is an important investment tool to consider as you plan for retirement. Its tax-free withdrawals, no RMDs, early withdrawal flexibility, and estate planning benefits make it a valuable asset for your retirement portfolio. Consider speaking with a financial advisor to determine if the Roth IRA is the right option for you.
Question: Why do you keep the roth for your safe investments? Why wouldn't you use a Trad IRA for that and do your real growth stuff in the Roth where you won't have to pay taxes on any (except in certain circumstances) or the growth? Because you want to be able to live off of it before retirement age?
P.S. I 100% agree with you on the debt or Roth question. If the debt is something you can pay off within a year or so, ok, do that. But if it's a debt that's going to take years to pay off, go for the roth. The Roth is time and contribution limited. If you get your debt paid off and then say have $20,000 to contribute, you can still only contribute $6k/7k ($6.5k to $7.5k now)of that per year. You'll be better off in the long run with filling the Roth. Plus, you still have access to your contribution if you're in danger of defaulting on your debt.
He, I saw another video from someone who didn't contribute to a Roth IRA. Turns out he basically made too much money to contribute… well, that's a good reason. Now, for the rest of us mere mortals, Roth sounds pretty good. Opened mine last Sept.
I appreciate the back to the basics video. A vote for a 457/403b update!!
I opened my IRA when I was in debt. Now I'm debt free… but married lol. So finding money to contribute has been very difficult. I'm glad I started it when I did.
Yo @BradFinn might be worth mentioning that RobinHood now has Roth and Traditional IRA options with a guaranteed 1% match and access to ALL the best funds like VOO and VTI, free 60 bucks a year!
I opened mine in 2021 and your vids were what helped me choose the Roth instead of the standard ira. Not at the point of maxing it yet but putting what I can in now and hope to be able to max it asap
Got it !! Just put $150 in today with VTI
Long time lurker, first time poster. Always been curious about your thoughts on VTWAX/VT. US vs Ex-US performance is a never ending debate, but can ride the middle lane with VTWAX & relax.
ROTH IRA is GOLD MINE!
Started mine this year! Only got $500 bucks in so far bit hoping to get another $500 by Tax Day then trying to double up each year until Max!
I started in 2017 when I was 25 and debt free. I'm so glad I did as time has been good to this portfolio!!
You can cash out 100% of your Roth tax free at 59 1/2, if you wanted correct? No withdrawal limits at that time.
Great stuff man! I’m 22, I opened mine during the beginning of last year (thanks to a few videos discussing Roth ira’s) I was able to contribute to the previous year and the current year. Now I look forward to maxing it out yearly being conservative as well since I don’t want to stress having to choose a single growth stock or a few for that matter. Thanks for the great info!
started my Roth this year, set a goal of 20 shares of VTI, goal achieved, same goal for 2023, once I get some debt paid off will change my goal to max it out
I am maxing out the ROTH 401K for work (20,500) and going to max out the Roth IRA (6k). Is there income or age limits for the ROTH 401K? I know there is income limits for ROTH IRA, not sure about ROTH 401K… Also, According to Ramsey and others they prefer the ROTH 401k over traditional, so I am taking their advice… Hopefully it pays off…
Okay you’ve convinced me. I’m gonna open one up as soon as possible! Ty for the push ✌️
Roth, set it and forget it!
first year with the roth and i was able to max it. I like running the wheel with my dividend stocks.
I'm one of…those…people. I thought I was contributing 2% to the Roth for quite a while now. The balance is zero, but the 2% has been coming out and going someplace else because I can't figure it out. A total of 19% (17 plus that 2%) comes out of my paycheck, mostly for my 401K, but for the life of me I cannot see where that 2% is going. I really need to contact my broker (Fidelity) tomorrow and iron this out.
Interesting.. Sounds kind of similar to a TFSA (Tax Free Savings Account) in Canada. The only differences are that there is a minimum age to open a TFSA, also not allowed to trade the wheel inside a TFSA. For options you can only buy calls or sell covered calls, not allowed to sell puts but you can still buy puts.. Also any withdrawals you make does get added back to your contribution room the next calendar year. So take out more than the yearly contribution room, it all gets added back in the next year.. Also, no income limit that stops you from opening or contributing to a TFSA. Interesting knowing how different your tax-advantaged accounts are in the US..
Also, not sure if you touched on this, but does unused contribution room for Roth IRAs get added to your contribution room for the next year? With TFSA, any unused contribution room gets added to the next year from the age you turn 18. So if you're 25 and never opened a TFSA, that's $56,500 ($41,787usd) in contribution room you have for 2023 if Canadian with a TFSA.
Opened one up 3 years ago. Compounding is a beautiful thing
I started my ROTH in April this year wish I had started it 30 years ago. Only position I have in it is O. I have a S&P 500 fund in my 401k
The most of ever made in my life was about 40 grand a year if I had $1 million I’d happily pay taxes on it because I love this country I’m not trying to cheat on my taxes
Started my Roth 401k in 2008…….retired at 52! Very good advice Brad!
Thanks for the video!! I will be putting into VOO. Did not know that my wife and I can combine if one of us passes.
Great video. Maybe you could do a video on mega backdoor roth conversions. This is very Blackbox out there it seems. My HR didn't even know if I could do it. A quick call to Fidelity let me know i had it available. Been knocking it out since. Can get up to 66k into the Roth IRA for '23
Love it!!
4:00 hilarious and also sad! I have heard stories of people opening an account, putting in money but somehow never investing it.