Quote:
Originally Posted by Titty Meat
Is a Roth account something worth setting up?
|
Yeah. So the way a Roth works is you put in after tax money. Meaning you. Don’t get to reduce your taxable income by the contribution amount. Also the gains aren’t taxed. That means that once you get to retirement everything that comes out is tax free. There are other benefits and it’s easier to get to if shot hits the fan but the tax breaks are real.
A 401K and Traditional IRA contributions are made pretax. 401K reduces your w-2 wages, IRA you get a tax deduction. Since the money in the fund hasn’t ever been taxed, the distributions are taxable income. Now that’s not all bad. In theory, in retirement, your taxable income should be low so it won’t be a super high tax rate either way. But in most cases Roth is better. Especially if you can afford the taxes.
If your employer offers a match on your 401K definitely contribute enough to hit all the match. DO THIS. IT IS FREE MONEY. After that, you should at the very least calculate your tax savings from the 401K and stick that in a Roth.
Optimally your employer will offer a 401K with a Roth option but there aren’t a ton of those plans around.
Do yourself a favor and get some ****ing money in some ****ing ETF. The details are far less important than getting it the **** in there. Even if it’s Ed Jones, just ****ing do it. Now.
Quote:
Originally Posted by lewdog
Oh I do and have been.
I just know that not everyone can afford that. There's nothing wrong with even a few hundred dollars per year, especially if you're young.
A ROTH IRA is probably the most valuable investment vehicle for middle class earners. You should, however, contribute first to your 401k to get your full employer match (free money). After that, people should look to fund a ROTH.
|
In theory there is some tax optimization you can do, but I’m not dork enough to calculate it. And I’m pretty dork.
Quote:
Originally Posted by Titty Meat
I'm pissed that this was never explained to me when I was in college.
|
Quote:
Originally Posted by Hammock Parties
No one told me shit either.
Financial lifestyle should be a mandatory class in HIGH SCHOOL.
Our educational system is a failure.
|
Y’all mother****ers took the wrong classes.
Whatever you’re going to do, business is at the heart of it all. Know the numbers.
/soapbox.