Do You Want Job or Financial Security

Would you rather have job or financial security?

The security of a pay check only last as long as the job does but a good investment can last for generations. Most people that work jobs offers a 401k plan however a Roth Individual Retirement Account (IRA) is another great way to get started investing to stabilize your financial security.  

With a Roth IRA any money you put in is never taxed as it grows and not taxed when you with withdraw it. This can be a big deal, For example, let’s say you take your tax return and contribute $6,000 to a Roth IRA next year and invest it in a index fund (Warren Buffet prefers the S&P 500 and it has proven to be one of the best). Let’s also say that the index fund returns 10%/year and you leave it to grow for 40 years. When you go to withdraw it, that $6,000 from today will have grown to $271,000 and this is not putting anything else towards it in the 40 years.

Like a traditional 401k account on retirement, the government wants a piece of the action. In the above example, they would say, “Ok, you started with $6,000 and it grew to $271,000 so you owe on the difference, the $265,000 of growth however if you invest inside a Roth IRA, you can withdraw it ALL (after the age of 59.5 years old) and immediately spend it on NO TAXES whatsoever. That’s a big deal! That’s why most people prefer to invest in a Roth IRA versus a 401k plan. Your money is your money!

With a Roth IRA you can start with any amount. Fidelity, Vanguard, and Charles Schwab offers great $0 minimum investments for your Roth IRA.

Key points to a Roth IRA:*It’s like a checking or savings account but it’s a special investment account.* Instead of just putting cash into a Roth IRA you INVEST inside your Roth IRA by buying preferably index funds but can buy stocks, bonds and mutual funds*The growth of the investment inside your Roth IRA is NEVER TAXED! (It’s a special deal the US Government to encourage US citizens to invest in their retirement)

Rules to follow:* You can’t contribute more than $6,000 per year for 2019 per IRS rules. Note if you’re over the age of 50 you can contribute up to $7,000 per year.  * You can with withdraw anything you put into it at anytime however any earnings on your investment to avoid penalty you have to wait till age 59.5 to withdraw earnings on investment TAX FREE!* You can’t contribute at all unless you make less than $122k as a single or $193k as a couple per IRS tax return files.

Overall opening a Roth IRA is just like opening a savings account but you go to a brokerage (Vanguard, Fidelity, Charles Schwab, TD Ameritrade, etc) instead of a bank.
A Roth IRS allows you to provides financial security as you can pass this down to generations to generations!

I encourage you if you don’t have a Roth IRA retirement account to open one up. Most retirement accounts now offer Roth 401k accounts. My advice in this case contribute 50% to regular 401k and 50% to Roth 401k. One special rule about Roth 401k accounts there are no income limits and the contribution limit is 19k which makes this a great option.
As always like many of you do, reach out to me if you have questions on setting up a Roth IRA account.

The life you live and the life you want is mostly determined by how you invest your money. The reality is, no matter what your income is, if you don’t have the mindset to make good investments you won’t actually live the life you want. Most people exist but very few people get to live life. When you adopt the mindset of investing, it actually allows your money to work for you even while you’re enjoying or living your life.

I leave you with this statement from Michael Jordan, “Some people want it to happen, some wish it would happen, others make it happen.”