Two Plus Two Older Archives  

Go Back   Two Plus Two Older Archives > Other Topics > The Stock Market

Thread Tools Display Modes
Old 01-20-2005, 03:32 PM
TGoldman TGoldman is offline
Junior Member
Join Date: Jun 2004
Location: Bellevue, WA
Posts: 15
Default Roth IRA Strategy

I recently made my 2005 contribution to my Roth IRA account and I'm wondering what would be the best strategy to use with my tax-exempt account? On one hand, I can see the benefit of using my Roth IRA to focus on tax free earnings for corporate bonds and REITs that generally derive most of their value from coupon and dividend payments. Yet on the other hand, I feel like I should use my Roth for more aggressive investing to offset taxes on any capital gains. What do you think? Keep in mind that either way I will maintain a diversified portfolio of stocks, bonds, REITs, etc. It's not a question of asset choice, but which account (taxable or tax-exempt) to allocate the assets. Thanks for your advice!
Reply With Quote
Old 01-21-2005, 12:54 PM
parttimepro parttimepro is offline
Senior Member
Join Date: Dec 2004
Posts: 227
Default Re: Roth IRA Strategy

Well, you want to put whatever investments will generate the most tax in your IRA. Currently, most dividends and long-term capital gains are taxed at a fairly low 15% rate. REIT dividends do not qualify for this special rate, so you should put those in the IRA. Short-term capital gains (from stocks held less than 1 year) are also taxed at a higher rate, so if you're going to do short-term speculating, that should be done in the IRA. A lot of actively managed mutual funds generate a lot of short-term capital gains, so if you like those (and you shouldn't), they should also be in the IRA.
Reply With Quote
Old 03-02-2005, 07:16 PM
Join Date: Dec 2004
Posts: 44
Default Re: Roth IRA Strategy

This strategy works if you will reinvest your tax savings. Since most (translated...nobody) computes their tax savings and invests that money also. I'd recommend putting the investment that will grow the most inside the Roth IRA.

Afterall, the Roth IRA grows tax free. I'd much rather have more money in my tax free account than a taxable account. Therefore, i'd place my stock investments inside my Roth IRA.
Reply With Quote

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

All times are GMT -4. The time now is 04:58 AM.

Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2021, vBulletin Solutions Inc.