SEP IRA

Posts Tagged ‘finance’

Question: Can someone tell me, as simple as possible, the pros and cons of an IRA and Roth IRA?

I like to contribute at least a $500-$1000 a year but I don’t which one will be best for me. Are there any other investments I can put money into?

Answer: Roth IRA is much better. For example if you are 29 and invest $3000 a year into a traditional ira your Contribution is tax deductable. If you are in a 33%(Federal&State combined) tax bracket you would have $1000 of tax savings a year and when you reach 59 1/2 you would have a total of $30,000 tax savings not paid to the IRS. Sound good. Let’s say you got an average of 12% (typical mutual fund average)on the money you invested it would now have a balance of about $500,000. If you did not want to deplete the money and make it last you would have to withdraw the interest that this amount your earning. Let’s say you are getting 10% which would mean your withdrawing $50,000 a year without depleting the retirement account. If taxes stay the same and don’t go up 33% of that money would have to be paid to the IRS or about $15,000. In 2 years of retirement you pay back 30 years of tax savings. Imagine if you lived to 89 you would have ended up paying $450,000. How does that make you feel? What if you invested $3000 a year into a ROTH IRA. A ROTH IRA is different and allows to take out your money tax free during retirement because you fund it with after tax dollars. You would get to withdraw your $50,000 a year and not pay a dime of taxes. The catch is you don’t get $1000 a year in tax savings. These are called qualified plans because they are qualified with the IRS. Do you want Uncle Sam planning your future. I would say a ROTH IRA is definitely much better because it provides you with more money at retirement which is the whole plan of setting up a retirement account anyway. It’s not about how much interest your earning but how much interest your earning after taxes that really makes the difference. Also for the majority of people find themselves in a higher tax bracket when they retire for several reasons such as the mortgage is paid off and their kids have moved out of the house. This is your life and retirement plan and is something you should consider very carefully and research very thoroughly. I hope this helps!
Aloha

If I know nothing about note buying will this be hard to learn?

Question: What is better for a one employee S Corp(hair styslit) a SEP IRA or Roth Ira?

Total income is about 50,000

Answer: BOTH.. and with that income, you can have BOTH…

Remember.. the Roth is POST TAX… so your income from it becomes tax free…The SEP is PRETAX ( like a 401K..)…

Your Money: Roth IRA’s

Question: Simple ROTH IRA question?

Hello, I am 29 year old self employed programmer working from home in the US. If I were to get a Roth IRA with mutual funds, do I have to constantly monitor and buy/sell stocks within the IRA? I used to trade stocks and used to freak out when the stock tanked in one day, so I told myself I will not get involved in that.

I am thinking that a financial advisor can pick a few good mutual funds for me and all I have to do is send a certain amount of money to it per month and when I am 55 1/2 years old I can begin withdrawing. Please let me know how this works and thanks.

Answer: The expenses at mutual funds can eat away greatly at your profits. Exchange Traded Funds hold many benefits over mutual funds. Besides, with all the mutual funds out there today, how do you know who to trust? My other belief is that by adjusting just a little bit, you can greatly increase your overall return.

Here is what I do with my long term trading account. It is a very simple concept. Look at a chart of the S&P 500 – most places the ticker symbol is SPX. Make it a weekly chart – meaning each unit (bar, candle, etc.) of time is one week. Then put a 50 week exponential moving average on the chart. This setup has an uncanny ability to direct the S&P 500. Since you can’t buy SPX, you can use SPY as an alternative. When the price is above the moving average, you buy the stock. When the price gets below the line and continues moving down, you sell it. This was an easy way to be out of the market during 2000-2003 and again at the beginning of 2008.

I am not a stockbroker or licensed in anyway. Just someone fed up with the system and decided to do a little research. Your mileage may vary.

Investment Finance Tips : How to Combine Retirement Accounts