Roth IRAs are great

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Encourage your kids to open a Roth IRA!

I opened a Roth IRA right when I got out of undergrad at my dad’s suggestion. I was making 43k a year, I would contribute up to the match for wherever I was working’s 401k and then max out my Roth, only 5k-ish a year back then. I’ve had that Roth for 15 or so years. The performance metrics only go back 10 years, but when I look at it I have a time weighted return of 15.6% compared to the s&p 500 return of 12.6%. I am all for putting as much money in s&p as possible, but I took some risks in tech and weed stocks, I would trade actively within that Roth when I was younger. Buuuut that 3% increase is only like 7 k-ish. I am proud I beat the market so far, but that’s not too much extra cash compared to just passive s&p investment. However it was a great learning experience, I certainly invested in some real duds as well. Now my spouse and I make too much to contribute to Roths ( I know I could do backdoor, but haven’t bothered). Long story short, without any additional contributions, that Roth account will be well over a million bucks when I retire, simply by putting in 5-6k a year for the first 15 years of my career. I will also have a 401k, pension, and social security at retirement, but man that tax free Roth money is gonna be sweet, assuming society doesn’t collapse between now and then.
I’m done babbling, thank you for coming to my TEDtalk

Dude, that Roth is gonna be taxed

No f'in way. It's already taxed money. They may force an RMD on it but I don't see it being taxed.

I think some of them will be taxed eventually but probably with some sort of cutoff— like $5 million and above

They tried that last time.. and to shut down backdoor Roth. Both measures failed.

I know but if we ever get around to raising taxes again, which is an if, the fact that they tried before is to me a signal they’ll try again not that it’s a dead end.

It won't pass the courts. This is taxation of already taxed $$. That's robbery and I don't think any supreme court will put up with it.

No, but what will happen in the future is that social security benefits will phase out entirely for individuals with especially high 401k and IRA balances, and with an accelerated multiplier penalty applied to those with large Roth balances.

[Anonymous]

Anonymous wrote:Most people don’t have an extra $5k or any k when they are young. They are paying back student loans for a looooong time.

Well no, but most babies don’t make w2 income. I opened a Roth for my son this year because I could since he had income. He made 5300 (which really was just saving me money on gas and clothes etc) and I contributed 5k.

Hopefully by the time your kids are taking out student loans you aren’t still paying yours.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Encourage your kids to open a Roth IRA!

I opened a Roth IRA right when I got out of undergrad at my dad’s suggestion. I was making 43k a year, I would contribute up to the match for wherever I was working’s 401k and then max out my Roth, only 5k-ish a year back then. I’ve had that Roth for 15 or so years. The performance metrics only go back 10 years, but when I look at it I have a time weighted return of 15.6% compared to the s&p 500 return of 12.6%. I am all for putting as much money in s&p as possible, but I took some risks in tech and weed stocks, I would trade actively within that Roth when I was younger. Buuuut that 3% increase is only like 7 k-ish. I am proud I beat the market so far, but that’s not too much extra cash compared to just passive s&p investment. However it was a great learning experience, I certainly invested in some real duds as well. Now my spouse and I make too much to contribute to Roths ( I know I could do backdoor, but haven’t bothered). Long story short, without any additional contributions, that Roth account will be well over a million bucks when I retire, simply by putting in 5-6k a year for the first 15 years of my career. I will also have a 401k, pension, and social security at retirement, but man that tax free Roth money is gonna be sweet, assuming society doesn’t collapse between now and then.
I’m done babbling, thank you for coming to my TEDtalk

Dude, that Roth is gonna be taxed

No f'in way. It's already taxed money. They may force an RMD on it but I don't see it being taxed.

I think some of them will be taxed eventually but probably with some sort of cutoff— like $5 million and above

They tried that last time.. and to shut down backdoor Roth. Both measures failed.

I know but if we ever get around to raising taxes again, which is an if, the fact that they tried before is to me a signal they’ll try again not that it’s a dead end.

It won't pass the courts. This is taxation of already taxed $$. That's robbery and I don't think any supreme court will put up with it.

No, but what will happen in the future is that social security benefits will phase out entirely for individuals with especially high 401k and IRA balances, and with an accelerated multiplier penalty applied to those with large Roth balances.

Good luck with that

[Anonymous]

Anonymous wrote:

Anonymous wrote:Encourage your kids to open a Roth IRA!


1) The advantages of a Roth IRA are well-known. Your post is like someone saying, "Guess what? Saving money is actually a good thing and may help you get ahead!"

2) Please don't encourage individual stock picking. It has been documented over and over again that the S&P outperforms virtually all individual stock pickers over the long-term, including Harvard and MIT mathematicians paid 7-figure salaries to give it their full attention. If you got lucky in weed stocks(??), good for you but don't encourage others to do foolish things.

There is a place for individual stocks in portfolios for people that have an interest in the markets and are willing to do the research. I would advocate a mix of funds, ETFs, and individual stocks. If you are trying to build wealth over time, individual stocks are a great component of that strategy. Individual stocks will give you better dividend yields than the S&P and some will outperform the S&P. Another tool in the investing tool box that people who have an interest can take advantage of. It is not brain surgery. aapl xom pm msft hd apd qqq crm acn avgo nvda duk mdlz wmt amzn googl meta low uber plus, you get the idea.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DC1 started a Roth at 18. We put in the entire money earned that summer into it (about 2.5K). Since then he's contributed the full extent possible based on internship and on-campus earnings. About $25K in it now. He'll leave college with $30K+ in his Roth.

Hope to do the same for remaining kids as well.

All of his earned summer money was put away? What did he use for spending money?

DP: we "match" our kids earnings up to the Roth Max once they started working. We also still give them 99% of their spending money, even when in college. So my kids just save/invest what they are earning and put the max in the Roth. By the time they are 30, they will have 1.5M at age 65 even if they never save anything else (dont' worry, they will continue to save). The compounding is huge if you can afford to gift your kids the money to save it all

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Encourage your kids to open a Roth IRA!

I opened a Roth IRA right when I got out of undergrad at my dad’s suggestion. I was making 43k a year, I would contribute up to the match for wherever I was working’s 401k and then max out my Roth, only 5k-ish a year back then. I’ve had that Roth for 15 or so years. The performance metrics only go back 10 years, but when I look at it I have a time weighted return of 15.6% compared to the s&p 500 return of 12.6%. I am all for putting as much money in s&p as possible, but I took some risks in tech and weed stocks, I would trade actively within that Roth when I was younger. Buuuut that 3% increase is only like 7 k-ish. I am proud I beat the market so far, but that’s not too much extra cash compared to just passive s&p investment. However it was a great learning experience, I certainly invested in some real duds as well. Now my spouse and I make too much to contribute to Roths ( I know I could do backdoor, but haven’t bothered). Long story short, without any additional contributions, that Roth account will be well over a million bucks when I retire, simply by putting in 5-6k a year for the first 15 years of my career. I will also have a 401k, pension, and social security at retirement, but man that tax free Roth money is gonna be sweet, assuming society doesn’t collapse between now and then.
I’m done babbling, thank you for coming to my TEDtalk

Dude, that Roth is gonna be taxed

No f'in way. It's already taxed money. They may force an RMD on it but I don't see it being taxed.

I think some of them will be taxed eventually but probably with some sort of cutoff— like $5 million and above

They tried that last time.. and to shut down backdoor Roth. Both measures failed.

I know but if we ever get around to raising taxes again, which is an if, the fact that they tried before is to me a signal they’ll try again not that it’s a dead end.

It won't pass the courts. This is taxation of already taxed $$. That's robbery and I don't think any supreme court will put up with it.

No, but what will happen in the future is that social security benefits will phase out entirely for individuals with especially high 401k and IRA balances, and with an accelerated multiplier penalty applied to those with large Roth balances.

SS is a program you pay into. They sure as hell better not "phase it out" for those that have actually saved in a 401k and IRA. Shouldn't be penalized just because you chose to save