Re: Why would I want to open an IRA?
 

Wow there is so much wrong information in this thread it should be deleted.


Go to the Stock Market Forum and look for posts about IRAs if you want some truthful information.

Re: Why would I want to open an IRA?
 

it is definitely EV+ to use an IRA for retirement savings. if your tax rate is 33% you can invest 30k into IRA as opposed to 20k into regular inv vehicle, and the compound interest on that extra 10k is awesome. your earnings from dividends will also be much higher as it is not taxable, and you will earn compound interest on that. there are many IRA calculators that will run sims on this sort of stuff for you and you're going to be shocked at the results.

max them out.

depending on how much you make this year vs how much you expect to be making at retirement it might make more sense to open a roth IRA

Re: Why would I want to open an IRA?
 

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Wow there is so much wrong information in this thread it should be deleted.


Go to the Stock Market Forum and look for posts about IRAs if you want some truthful information.

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Re: Why would I want to open an IRA?
 

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Okay, I'm doing my taxes for '05 and I am trying to understand the logic behind an IRA. Why would I want to put 40k (I think the maximum is) into an IRA?

Sure, I don't have to pay taxes on it now, but I will when I withdraw it, correct? So what's the point? I either invest it on my own, pay taxes on the principal now, and pay taxes on the interest as I go along or I pay all the tax later (but I can't touch the money for almost 40 years).

I can't see why anyone would want to do this unless their company was matching contributions. As a self-employed person, I don't see the point.

Try to convince me otherwise?

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With a traditional IRA, the main advantage for some like you (that seems to make a lot of money), is that if you are in the highest tax bracket today, you can invest to get maximum tax savings today, and then when you retire, or if your income drops significantly when your older, you can withdraw from the IRA at a reduced tax rate.

For example -- when you invest now you save 35% on taxes. When you make withdrawals when your older you might only have to pay 20% tax on your withdrawals -- plus the money grows tax free until you make a withdrawal. (i'm not sure on what the tax brackets are -- the numbers i used are just an example).

Re: Why would I want to open an IRA?
 

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Wow there is so much wrong information in this thread it should be deleted.


Go to the Stock Market Forum and look for posts about IRAs if you want some truthful information.

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I haven't even read the rest of this thread, but I'll follow your advice and just a search there. I don't want innacurate information to screw with my mind.

Re: Why would I want to open an IRA?
 

There are 3 types of IRA's from what I remember being told, if your income is over a certain level(its like 120k) you dont qualify for the other 2, the most commonly used ones. Traditional IRA=you deduct the income for this year and pay it when you retire/take the $ out, ROTH=you pay taxes this year on the $ you invest, and the $ it makes is tax free, there are maximums for these per year and they are not very high, you will want to have a personal investment account too. What everyone else said here too, get some good advice from someone who does that type of thing for a living.

Re: Why would I want to open an IRA?
 

I started a thread in the Stock Market forum to hopefully get some better answers.

I don't qualify for a Roth IRA, as I make too much.

Also, as a 60 year old, I don't anticipate making less than I do today. If I do, I screwed something up.

I'm fairly certain if I put my investment into a mutual fund or some other stock/bond account, I don't have to pay taxes until I withdraw (capital gains at 15% of the money earned) so compounding isn't an issue. It seems like with a traditional IRA my earnings are taxed at my income tax rate.

I understand it's tax-free now and all that... but having to hold onto the money until I'm 60 with no leeway for investing it somewhere else (house, business, etc) seems like too high of a price to pay for very little benefit.

Anyways, respond in Stock Market if you have any further thoughts.

Re: Why would I want to open an IRA?
 

im pretty sure if its a self directed IRA that you can buy a house with it. it might have to be a rental property/flipping deal though im not sure. you can also borrow against the self directed IRA. if you borrow against it at like 6% interest and youre making 10% interest on the money in your IRA youre actually making 4% profit on your money while being able to spend it ahead of time. you could basically borrow against your IRA to buy a house and your interest in the IRA could excede your mortgage loan.

Re: Why would I want to open an IRA?
 

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I'm fairly certain if I put my investment into a mutual fund or some other stock/bond account, I don't have to pay taxes until I withdraw (capital gains at 15% of the money earned) so compounding isn't an issue.

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A mutual fund will generally throw off taxable capital gains and dividends every year.

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I understand it's tax-free now and all that... but having to hold onto the money until I'm 60 with no leeway for investing it somewhere else (house, business, etc) seems like too high of a price to pay for very little benefit.

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Your IRA is an asset that you can borrow against!

I've also responded in the stock market forum with a bunch of links to more info.

Re: Why would I want to open an IRA?
 

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I'm fairly certain if I put my investment into a mutual fund or some other stock/bond account, I don't have to pay taxes until I withdraw (capital gains at 15% of the money earned) so compounding isn't an issue. It seems like with a traditional IRA my earnings are taxed at my income tax rate.


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You don't get it. The money you put into your IRA is PRE-TAX dollars.