I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
Those sound like great picks! consider financial advisory so you don’t keep switching it up, top 3 payers for the month were $OHI, $KMI, and $EDP... not bad for 350k
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a CFA, even though I was skeptical at first, and I beat the market by more than 14.3%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an advisor.
I'm intrigued by this. I've searched for financial advisers online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
I've experimented with a few over the past years, but I've stuck with ‘’Aileen Gertrude Tippy’’ for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
In the simplest sense, retirement planning is what one does to be prepared for life after paid work ends. This isn't just financially but in all aspects of life.
My portfolio doesn’t just cater to dividend stocks. I hold $VFIAX (S&P 500 index fund) in my Roth IRA and $VTI (Total Stock Market ETF) in my taxable brokerage account. Two of my largest holdings. The individual dividend stock positions all complement the index holdings.
Thats when you hire someone to manage your money. You need a (CFP) straight up! personally, I would invest in ETF's and also love investing in individual stocks.
I took charge of my portfolio but faced losses in 2022. Realizing the need for a change, I sought advice from a fiduciary advisor. Through restructuring and diversification with dividend stocks, ETFs, Mutual funds, and REITs, my $1.2M portfolio surged, yielding an annualized gain of 28%.
‘’Aileen Gertrude Tippy’’ is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Accurate asset allocation is crucial, and some individuals use hedging strategies or allocate part of their portfOlio to defensive assets for market downturns. Expert guidance is vital for achieving this. This approach has helped me stay finan-cially secure for over five years, yielding nearly $1 million in returns on invest-ments.
My CFA ’Amy Desiree Irish’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Investing in a Roth IRA is a great option because it's funded with after-tax dollars, allowing your contributions to grow tax-free over time. When you retire and start taking money out, you won’t owe taxes on your withdrawals, helping you hold onto more of your savings. I personally retired with $5 million.
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
Accurate asset allocation is crucial. Some use hedging or defensive assets in their portfolio for market downturns. Seeking financial advice is vital. This approach has kept me financially secure for over five years, with a return on investment of nearly $1 million.
Yes, it helps that it is more flexible too, so it provides a window for mini-retirements. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that pina colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part of investing for retirement, whether using Roth or traditional. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
Safe to say not everybody has the skill to pursue investing. But it's always easy to follow the advice of someone who knows how to i.e a financial advisor. You could anywhere between 10--40k with the right ones. Online businesses are a good bet too.
I might want to try out a financial advisor this year, but the amount of information on the internet is overwhelming. I know it's not appropriate, but you could recommend a good one(s)?
I don't comfortably throw recommendations around on the internet, but I've been working with Sharon Louise Count. She's pretty brilliant! I'm sure there are others who are good, too.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
I just 30 this year and have just under $40k in my own 401k and another $10k between my other retirement accounts. My wife has about $41k in her retirement accounts (she is not currently working). I currently make close to $63k a year. I only do 5% though to my 401k for the company match and another 10% of my income is split between an HSA and a ROTH IRA
51 years old. I have $295,588.25 in my Fidelity retirement account. I cranked my contributions up to 35% and I do all the investing on my own. Fidelity just holds my ETFs/stocks. I made that change earlier this year. I'm hoping to end the rat race by 60 but it's looking more like 63-ish. I want to have $1.5M and bring in about $60k in dividends each year. Pedal to the floor! Thanks for the video. Great content.
As a new investor it's always great to hear from a person who has gone through all the difficult times and come ahead of it. What are some strategies i can employ to be successful?
Thank you so much for your helpful tip! I was able to verify the person and book a call session with her. She seems very proficient and I'm really grateful for your guidance
@@alexyoung3126 you’re 51 with a nest egg of ~$300k. You most likely won’t get to $1.5M by 63ish, and you sure as hell won’t get $60k/yr in dividends. As a financial advisor, I hear people say things like this all the time, but you’re better off being realistic and planning as opposed to hopping
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
My advisor is a lady and goes by the name Melissa Jean Taligdan I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as an individual investment account or employing the services of a retirement planner/financial Advisor.
My CFA Julianne Iwersen Niemann, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
Prioritizing effective personal finance management holds greater significance than the sheer amount saved, irrespective of income source. Consulting a certified financial advisor can offer tailored strategies to optimize financial results by reducing expenses and enhancing income, regardless of whether it's earned through employment or investments.
I wholeheartedly concur. At 62 years old and newly retired, my external retirement funds total around One million two hundred fifty thousand dollars.. With no debt and minimal retirement fund allocation relative to my portfolio's value over the last three years, I recognize the importance of a financial advisor. Neglecting them isn't an option; however, thorough research is vital to find a trustworthy fiduciary advisor.
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I don’t know how but you’ve managed to package an unbiased analysis that is more entertaining than the sensationalized segment of economic and financial news. Thank you for your efforts to be the signal and not the noise. I understand that the economy is currently in a downturn and that we must wait for things to get better
I think the current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner
Exactly why i enjoy my day to day market decisions being guided by a portfolio-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not outperform, been using a portfolio-coach for over 2years+ and I've netted over $800k.
Finding financial advisors like Margaret Johnson Arndt who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I promptly did some research on Margaret’s past. She can control herself well. Her credentials are solid, and it seems like she was the subject of a careful examination. Foreign investors from countries other than the United States can also use her services
Indeed, that helps that it offers a window for mini-retirements and is also more flexible. I'm not waiting to be 60 and retire to some idyllic place. Knowing how to pay for the lifestyle is helpful. It's true that earning money while enjoying a pina colada on the beach is beneficial. If not, I could not have completed it.
Yes, whether utilizing standard or Roth investments for retirement, people tend to overlook that aspect. You don't take your life money and take off for Puerto Rico. Two major benefits are prudent investment and sound business judgment. Invest in real estate, stocks, and start-up companies. That is all.
It's safe to state that not everyone possesses the aptitude for investing. However, it's always simple to heed the guidance of an expert, such as a financial advisor. The range of 10-40k is possible with the appropriate ones. Internet companies are also a wise investment.
Monica Shawn Marti has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Thank you for sharing, I must say she appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive. I reached out and scheduled
Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
Agreed the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around $300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, and leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the advisr that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
There is also no earned income requirement to convert to a Roth. As long as you have a balance in an IRA, in theory, you can keep converting to a Roth as long as you like. But how best can i compound at least $2m in retirement savings without holding cash?
Consider hiring financial advisors, estate planners or tax experts. They can provide specialized knowledge and help you navigate complex financial decisions in such as retirement planning
Agreed, It's really challenging to create a strong retirement portfolio, so I always preach about the importance of having an advisor.This helped me stay afloat and improve my portfolio 0f $450k by 90% in 5 years.They have strategies that are specifically suited to your long-term objectives and financial aspirations.
'Monica Selena Park' is the CFP that guides me, her reputation precedes the exemplary service she offers, and I'd gladly commend her on a public post, you can locate her if you are internet-savvy.
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money.
If you’re new too investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
I recommend Grace Adams Cook so you can simply delve deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Thank you for sharing, I must say, She appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive.
I am 27 and i just started my ROTH IRA and deposited the max for 2024! I feel stupid for how long it took to get my life straight. The problem here is, what is the best way to invest the money to grow to $1 million for retirement?
I believe every Investor should start with ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
You don't need to find the next NVDA to succeed in investing. Just choose top-notch ETFs and partner with a financial advisor like I did. I turned $100k into $20,000 in annual dividends-a significant milestone for me today.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
People who are able to retire early are lucky . I have 15 months till 65 and need to look at calling it quits, my only fear is running out of funds much later, thus keen on investing. What could be the safest possible ways to invest for cashflow, in order to afford lifestyle after retirement?
Based on my own experience working with an investment advisor, I currently have $1 million in a well-diversified portfolio that has grown exponentially. It takes more than just money to invest in stocks; you must also be knowledgeable, persistent, and have strong hands.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
“LAURELYN GROSS POHLMEIER ’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I have worked all my life without thinking about my retirement. Now my kids are growing fast, the way I am spending my savings, it has come to my attention that at my old age, I will have no jobs, no money left and no retirement funds to fall back to. So I am asking what do I need to do and how do I begin investing in my retirement. I just need professional advice. Thanks.
@FloraGEvans I am kind of skeptical about all investments, but I have no other option than to begin my retirement plans. Please what more can you tell me about Deborah Lynn Dilling. I want to be in safe hands.
Choosing a Roth IRA is advantageous as it uses after-tax funds and allows tax-free growth. When I retired, I had $3M million saved, and I won't be taxed on my withdrawals.
@bezosjesss You're right, I used a financial advisor. Approaching retirement, I've benefited greatly from their guidance. Starting late, I knew index fund compound interest wouldn't be enough. It's funny how I've outperformed peers with more years of investing experience. I've made over $870k in profits without tax.
@debwes 'Heather Lee Larioni' is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.
With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
Yeah, more reason I enjoy my day to day market decisions is that i'm being guided by a portfolio-coach, seeing that their entire skillset is built around going long and short at the same time, both employing profit-oriented strategy and laying off risk as a hedge against the inevitable downtrends, coupled with the exclusive information/analysis, it's quite impossible not to outperform. Netted over $1.5m in return on investment, since using a coach 2years and counting.
talking about coaching, do u consider anyone worthy for recommendations? I have about 80k to taste the waters now that large cap stocks are at a discount... thanks
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, Carol Vivian Constable turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
I just retired, but I am uncertain that my 401k and IRA will ensure a stable future. I have $900k set aside, I am seeking an approach that matches my risk tolerance and financial objectives. Please I need advice, should I invest in stocks or real estate ?
You should explore rosters of dividend aristocrats and select six to ten from the compilation. These esteem companies boast a remarkable history of consistently paying dividends for over 25 years. Furthermore, it is discerning to engage a financial advisor to help in crafting a meticulously structured portfolio.
I am interms with working with a financial advisor. It has really helped in shaping my retirement future. I am currently working with CFP, his expertise on wealth management and tax planing is unmatched. He has really helped in optimizing my financial growth and security. He works in accordance with my financial goals and my risk tolerance.
Yeah.. I think the first concern of any experienced financial advisor is to understand the financial objectives of his clients and the amount of market risk their clients can tolerate and working closely with them to produce a strong result.
Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
I think this is something I should do, but I've been stalling for a long time now. Mind if I ask you to recommend this particular coach you using their service?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sharon Marissa Wolfe” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Benevolence, this reference seems valid.. Just inputted her full name on my browser and found her site without sweat, 13 years of experience is certainly striking! very much appreciate it
I appreciate the mental thought to "trick" yourself in to saving more, but there are certainly many of us who moved to locations with higher taxes for work (e.g. NY or California) but have no intention of retiring here. Of course federal and state rates may change, but if I'm still getting taxed at coastal rates when I retire, something has gone horribly wrong.
*The greater the passive income you can build, the freer you will become. Taking the first step is the hardest, but 7 house later living off passive income since June 6, 2021. You've got to start taking steps to achieve your goal.*
@@darlahoot209 All passive income ideas work as long as you put the work in. I focus more on cryptos, NFTs, real estate crowdfunding and IDOs. With the assistance of a financial consultant, I'm doing well for myself.
@@bradleyjones9233 Thanks for your response but how do I get access to your financial consultant? Can you share more info about him/her if you don't mind.
@@darlahoot209 You can make a quick internet research online with her name JENNIFER D. ALAINE. The rest of the information is there for you to read and get in touch.
Jennifer D. Alaine is the best in this space, I'm happy to come across these recommendations. I have worked with her and I am impressed with the thoroughness and professionalism of the investment diligence packages she provides.
The majority of people who retire have limited retirement savings. Therefore, many end up being in a lower tax bracket when they retire. However those that put more money away, yes eventually you want to have a Roth account. When someone retires, the average retirement account holds about $200,000 depending on the online source you look up. And as the years go by the brackets are adjusted to reflect inflation.
My dividend journey began when I realized that two particular expenses in my budget were always going to go up and never go down. The two expenses were taxes and insurance. I realized that the dramatic rise in both will need some added income. So, I started buying shares paying dividends. I can now see that this will be the path I need to take to make sure those two expenses will not overtake my future income.
What about the fact that all money going into a Roth is coming off the top, so at the highest point in your tax bracket. For me (married filing jointly) I am paying 22% up front for anything put into a Roth. However, withdrawing from a traditional IRA or 401k I would pay 10% up to $22k, then 12% up to $89,450. I wouldn’t be paying (the same) 22% until I take out more than $89,450 per year. So, traditional seems to make more sense unless you have other income filling the gap beyond that same high tax bracket. Social security, pension, etc.
If your career path salary tax bracket remain similar until retirement then traditional 401(k) contributions makes more sense for you. If you drop to 12% Federal Tax Bracket that'll be good time to contribute or convert to Roth.
Some amount of taxable income is good. The reason is that you'll pay no or little taxes on at least some of the money. I think a good strategy is to start out paying into a Roth account early in your career and when your tax bracket is low. Later in your career, when you are closer to retirement and your tax bracket is higher, contribute to an IRA. If following the 4% rule, and depending on your tax bracket, then aim to have around 25x the standard deduction invested in a pre-tax account. You can even bump that up to the 25x the 12% limit. There isn't much difference between 22% and 24% right now, and even that might change back to 25% and 28% soon.
To help me prioritize on other things of life; I have been researching on a consistent and reliable portfolio manager to invest with and make good money..I hope Michelle will be of a help.
As a rookie holding a winning trade is difficult, i was afraid of losing profit, same as holding a losing trade, i always prefer not to accept the loss and hope it gets back to even so i can get out with no loss. With Michelle Christine Parker, as a professional mentor i was able to know a good market to invest in.
I’m currently retired, and considering the current rollercoaster nature of the stock market, I decided to stay on the sideline for awhile, now I’m worried with the numerous bank failures as of late, am I better off reinvesting my savings in the stock market or do I wait?
there are numerous intriguing stocks across various industries that might catch your attention, but it's not always advisable to act on every prediction. Therefore, I suggest that you work alongside a financial advisor who can help you determine the best times to buy or sell the shares or ETFs that you are interested in.
I have maintained contact with a financial analyst since the inception of my business. In today's dynamic market, the challenge lies in determining the opportune moment to purchase or sell when investing in trending stocks, a task that may seem straightforward but can prove to be quite challenging. With a portfolio that has increased by over $900k in a relatively short span of one year, I have delegated the responsibility of selecting entry and exit orders to my advisor.
“Vivian Carol Gioia”, my financial advisor, is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field.
I set up a call with her and am really grateful that I did. I copied and entered her name into my browser and it came up in the top search results. I've seen comments about advisers but not one who looks this amazing.
What I love about the Roth 401(k) is it can help you save on taxes in retirement. Not only are withdrawals tax-free at 59 1/2 , it won't impact the taxation of your Social Security benefit and Medicare premiums.This is an important aspect of a Roth account that most people are not aware of. yes right now I prefer the Roth 401k! Because I am paying 19% in taxes on my Roth contributions. That is for state and federal combined.
19% combined state/federal means you're in 12% Federal Tax Bracket making less than $45,000. If you can afford to do so you should also favor contributing [$6,500] to Roth IRA every year.
@@alrocky Wouldnt things like marriage / head of household / children/dependents affect tax brackets? My federal tax bracket is rather low as head of household with 2 children even though my income over 100k/yr.
It's essential to understand that with a Roth account, you won't receive a tax refund. That's precisely why traditional accounts are a better option. In both types of accounts, you will be taxed, but the difference is that with a traditional account, you'll get the advantage of a tax refund.
I,ve always looked at the math and figured that the money I did not pay in taxes on a traditional 401k would gain compound interest over the years and put me ahead enough to pay the taxes. Causing people to save more and then say you have more because of tax difference I don't think is that much superior. It is not a bad strategy but just a different one
The S&P 500 moved 8.9% higher last Month, achieving one of its best monthly performances in history.. which is an indicator for profits to continue to improve. I just want my money to keep outgrowing the inflation rate. I'm still looking for companies to make additions to my $500K portfolio, to boost performance. Here for ideas...
I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
Agreed, It's essential to diversify your portfolio. While quality stocks are a solid foundation, you should also consider other assets to spread risk. Thankfully, I can attest to the success of this approach aided by professional guidance seeing my portfolio of $330k grow by 29% this year alone... maybe you should do the same.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
I work with Elisse Laparche Ewing as my fiduciary advisor. Simply look up the name. You would discover the information you needed to schedule an appointment.
I've been reconsidering my retirement strategy, questioning if my 401(k) and IRA are enough for a secure future. I’ve also invested $300K in the stock market, but the returns have been inconsistent and modest. I'm looking for an investment approach that better aligns with my risk tolerance and financial objectives.
Using a 401(k) or IRA is a valuable strategy for retirement planning, providing potential savings growth and tax advantages. While the stock market is promising, expert guidance is essential for effective portfolio management.
Opting for an inves-tment advisr is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a year now. Starting with less than $200k and being just $19,000 away from making half a million in profit.
I've stuck with "Graham David Fullerton" for 4 years now, and his performance has been consistently impressive. He’s quite known in his field, you can confirm him on the internet.
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $300k, but I'm not sure how to go.
That’s true, Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, , and in just a few months, I was able to earn over $950K in net profit from high dividend yielding stocks
It's essential to understand that with a Roth account, you won't receive a tax refund. That's precisely why traditional accounts are a better option. In both types of accounts, you will be taxed, but the difference is that with a traditional account, you'll get the advantage of a tax refund.
I lost over $80k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Charlotte Miller.
She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states
I'm surprised that you just mentioned and recommended Charlotte Miller, I met her at a conference in 2018 and we have been working together ever since.
I just withdrew my profits a week ago, To be honest it was an amazing feeling when the profits hits my wallet I wish I could reinvest but, too much bills
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. Compounding is the process of earning interest on your initial investment, as well as on the interest that investment earns. This means that over time, your investment can grow exponentially. So the earlier you start investing, the more time your investment has to grow through compounding.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
@@greekbarrios I completely agree; I am 60 years old, recently retired, and have approximately $1,250,000 in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.
Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. "Jill Marie Carroll" is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
@@Ammo-Hoarder This is useful information; I copied her full name and pasted it into my browser; her website popped up immediately and her qualifications are excellent; thanks for sharing.
It works out exactly the same if tax brackets are equivalent. Assuming a 25% tax rate. $100k pretax turns into $2M (then becomes $1.5M) and $75k post tax turns in $1.5M. The real trick is what Dave says at the end: you trick yourself into saving more. And you are in a good position in the case that your tax rate goes up.
You are right, but it is only right if you stop investing at the time of retirement. However, if you keep investing, your 1.5 millions is stilling growing without paying a penny in tax. If you have a few millions, you can live off from the growth/interest/dividends for the rest of your life and no need to worry about your principle running out. Sweet!!! Plus, you are not forced to take money out (RMDs) with the Roth while you are with the Tradition.
Good example. I agree. Roth and traditional are exactly the same if tax brackets are identical. With that said, it's bad to have too much in Roth. In your example, you have 1.5M in roth. Assume you withdraw 60k a year, which is your only income (plus social security). About 26k would be tax-free anyway (due to the standard deduction), so you got no benefit for it. You would be better off withdrawing 26k (or perhaps more as you're in a low bracket) from a traditional and the remaining from a Roth. Dave suggesting putting all retirement in a Roth your entire wirking career is almost always bad advice.
My tax bracket will be lower when I’m retired, so traditional seems better for me. This is primarily because I started late putting money into a 401k. For people who start early and make less should absolutely do a Roth.
Dave is kinda sorta right but he makes it sound more complicated than it is. If when you retire you are in the exact same tax bracket as before, the Roth and the Traditional will be equivalent. If you are in a higher bracket the Roth is preferable, if you're in a lower bracket the traditional is preferable. The thing that makes it tricky is that you might not be able to predict what your tax bracket will be in the future.
They’re not quite equivalent, the Roth would only be taxed at the same rate but only on the initial investment and not the growth. the traditional investment would avoid the tax initially but the growth and the principal would all be taxed
Agree with you Tim. The discussion about tax brackets in retirement ignores the tax-free growth you get in the ROTH. And if you invest long enough, most of the money will be growth. The way I always think of it is there's a reason why the gov't lets you put 23k in a 401k and 6.5k in a ROTH. The ROTH is better!
@@timmilowic871 But the amount that would be taxed initially in a Roth would be able to grow as well as long as the money that would have been taxed is contributed in the Traditional. If tax rates were flat and never changed, and the amount invested into the Traditional includes the amount that would have paid in tax upfront plus would would be put in a Roth, then the Traditional = (Amount*growth)*(1-tax rate), while Roth = (Amount*(1-tax rate))*growth. Of course, if your employer offers Roth options inn your 401k and you are able to make the max contribution of $22,500, then maxing out Roth is better than maxing out Traditional, as that is a de facto higher contribution. It all comes down to whether taxes would be higher in the future. I personally like a mix, as I don't expect to be working in retirement and there will be some money that is protected in the lower income tax brackets, as I assume the Progressive Tax structure will remain, with those brackets moving up with inflation.
@@timmilowic871 yes, traditional will tax on all the earnings but Roth will tax now from the potential earnings in the future. For example, I use traditional 401k to save 8% a year and then invest them in a brokerage account so I can manipulate the tax rate even further. If I choose Roth 401k, no tax on the earnings but I will lose 8% each year regardless of how my investment is doing.
@@jbarkley4938653 Many of my coworkers didn’t understand that over 25 years ago. We didn’t have Roth yet but we did have aftertax and pretax contributions. I decided to go 99% with aftertax then switched to 99% Roth when it was offered. Always thought 25-40 years of tax free dividend/interest reinvesting,compounding,and growth was better than pretax.
Why are IRA contribution limits kept so LOW ($6K/$7K)? They should be made the SAME as 401k limits so that folks without a 401K can be on equal footing! Somehow this video has helped shed light on some things but I'm aiming to create a portfolio worth not less than $2m before I turn 60.
A solid strategy can be a key component of an investor’s portfolio. Well, the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.
Yes true, I learnt that in 2020, when I lost almost everything. But I switched to using a financial advisor and I've been returning at least $98k every month so I’ve been sticking to investing via an Advisor.
My consultant is NICOLE DESIREE SIMON She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Great video, but I like to point is not always a no brainer and all advantages to choose Roth over Traditional IRA. For a person who started doing traditional IRA and not Roth till mid age says 55, and have accumulated quite a large amount in the traditional IRA, it can be a bad choice to convert to Roth IRA at that time by listing to the "Roth is always better than Traditional" advice and hoping to get tax free withdrawal later. The reason is that, after the conversion of the traditional IRA potentially in high tax bracket being still employed, your investment capital is reduced by the tax you pay at the conversion. After that reduction of capital, even though overall paying no tax later on withdrawal and it seems you will pay a lot tax later with traditional IRA withdrawal, BUT - your remaining Roth IRA amount after the conversion won't come out ahead on the total value later. That traditional IRA without paying tax now will generate more money as it's a bigger capital.
What Dave's example misses is that you have MORE money to invest with a tradional IRA rather then a ROTH. He said: "You have 90K to invest, it turns into 2.5 million, which is all taxable" - which is true. However, if you put your money into a ROTH, (assuming it's the same input), you would be taxed up front, so instead of 90K to invest, you would have maybe 70K to invest after you pay the taxes up front (standard IRAs you don't pay any taxes up front). So, assuming it's the same investments, instead of 2.5 million in the end, you probably would have 2 million, because you invested less to start, and have less to compound. He does not factor that in, and that is BIG. So yes, you pay more in taxes in the end, but you also earned a lot less, so it probably comes out more as a wash then as he states it.
He does start to mention this at 3:19. Dave's point (I'm not a huge Dave fan, btw. I do dave-ish) is having traditional earn more than Roth requires that you put in more. If you put the same $100 a paycheck, Roth wins every time. Dave does frustrate me often with the Roth v traditional argument because he usually doesn't mention this.
@@Ethan-ls4cl That skips past the tax savings, just like Dave did in this video. The extra money cannot just be ignored as Dave tries to rationalize. $100 after tax in a 20% bracket means that $100 cost you $125 in pay. That $125 could go into a traditional. Or, you do a literal $100 each: putting $100 in the roth cost you $100 after tax. but putting $100 into the traditional only reduced your paycheck by $80. meaning if you had $100 in after tax already for the roth, you now have an extra $20 to do something else with the traditional, like pay down the mortgage or invest or ross into a roth IRA, etc. Whatever you do with it, that $20 helps out somewhere. Dave acts like this extra money just vaporizes when he actively teaches his followers to do something with every bit of their money. There is no way it would go to waste.
Math will be the same if you do IRA or Roth IRA if the tax rate and growth rate the same for both situation. However, having a large IRA at retirement age can pose other problem such as RMD.
@datbio7302 is correct: FV=P(1+i)^n, or P*K where K=(1+i)^n. For T-IRA, FV=P*K-Tax%(P*K), or FV=P*K(1-Tax%). For Roth, FV=(P-P*Tax%)*K, or FV=P*K(1-Tax%), same result if you can live on your required T-IRA RMD and taxes are lower on your RMD than when you contemplated a Roth. You can likely live on your RMD if your house is paid off. A 60 year old today doesn’t start a RMD until 75 and the RMD is P/24.6 years. At P=$5M, you’d have to take out and pay taxes on $5M/24.6 = $203,000/yr, and Ramsey would be correct if your salary was below this when you had had the chance to go Roth. If your P=$2M, however, your RMD would be $81,381/yr, and that, if you can live on it assuming you don’t have a house payment, is likely lower than than the salary you had when you were contemplating the Roth. The funny part is that Ramsey extracts back for us near his age to a day there were no Roths, and tries to predict your career salary and future tax rules for you as a new member of the work force. All in all, though, he has basic sage advice to the point I have sent one of his recordings to my Daughter and said, “Please. Listen to what he is saying here!”
My biggest concern on this discussion is with the way government spends now and how innovative they get trying to tax more whether when I retire 40 years from now will they decide the “rich” who were financially responsible will have to pay taxes on that post-tax investment anyway. I think a lot of this is trying to predict the future where lots of potential complex changes to tax laws confuse me.
They absolutely could, but I'm betting you'd see taxes increase on income, pre-tax accounts and capital gains tax from brokerage accounts first. The year 2026 will be the one to watch.
I love the information but it is very situational, for instance we make to much to put money into a IRA which means 401k plans are the only tax advantage we can have. Currently we are maxing out two plans to try and get the liability down even though to make sense. Falling into a 32% tax bracket to me does not make sense to put it all into a Roth 401k.
An argument in favor of traditional IRA is the way states tax income in retirement. A lot of states offer at least some (state tax) break on retirement from a traditional IRA. NY (where I live) has very high income taxes, but you pay no taxes on the first $20,000 of IRA income in retirement. So, at least in NY, there is a possibility that some of the traditional IRA funds will never be taxed at all. They will of course still be taxed by the federal government.
Also speaking of state taxes if you put money into traditional then you save on both state and federal taxes and say you move to a different state in retirement you avoid those state taxes altogether.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing below the $100k mark and in the first 2 months, my portfolio was reading $234,800. Crazy right!, I decided to reinvest a huge percentage of my profit and it got more interesting.! For over a year we have been working together making consistent profit just bought my second home at the beginning of summer.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@EthanCarter-n2y However, if you do not have access to a professional like Suzanne Gladys Xander, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
This confirms I made the right choice when I started working in the government in 2021. After only 3 months in the job, I switched from the traditional to roth and have no plans of going back 👌
My growth of 401k is 2.74% in the past year. In this environment does investing under a brokerage with a custodian outperform a 401k? should I seek a pro to grow my funds on brokerage acct or still hold? I have 5 years to retirement. Glad to discuss.
Be careful not to be lured into the market too soon, this current situation has really opened my eyes to the importance of a good mentor on YT or elsewhere knowing what they are doing .
@@TariqTrafficante who is this manager you use? I lost over 50000 already this year with Edward Jones. Im in need of guidance from a private financial-planner going forward.
@@CeeRiplayis I did some findings on the Loren lady, she seem to know her stuff. educational background, qualifications was really impressive. Kudos and thanks for sharing. I left a note, wrote an email for a consult and set up a call. Thanks 4 thisTariq.
Really this question doesn't matter. Fund both. People who save a lot are doing that anyway. Try to max Roth (post-tax), HSA (pre), and 401(k) (pre). If you have kids max an ESA (2k limit - post tax).
Contributing $6,500 to *Roth* IRA every year and (as much as your income and budget allows) up to $22,500 to *traditional* 401(k) is good default choice.
I'm a financial advisor. Depends on the person and state, and many other things. Some people traditional is better, some, Roth. Usually doing traditional is best during highest earning years prior to retirement, then when you retire, get residency in no income tax state, wait on social security, and do large Roth conversions up to your target bracket. If your advisor isn't doing this work (which can save you millions in taxes + compounding of savings) they suck.
Dave, I so wish I would have been listening to you well before I retired. I did fairly well on my own but I also made the assumption that I would be in a lower tax bracket in retirement. About 1/3 of my savings is in Roth, the rest is in a Traditional, both are rollovers from my 401k and I have converted some to Roth in the past few years. I have pensions including social security totaling just over $100k/year, a $340k mortgage at 2.25% on a $740k home in Utah (my only debt), and savings in IRAs of $1.2M. Should I use my Roth to pay off my mortgage?
Is it a fixed mortgage? If so, you're probably better keeping the money in the market. But have an emergency fund in Treasury bonds in case things go bad. If it's a variable-rate mortgage, pay it off. You'll sleep better knowing that there's no risk your rates will hike.
Having some in each is actually not a had deal. When you are young and in a low tax bracket, max out ROTH. A few years before retirement when you are in a higher tax bracket and don't have as many years for the money to grow, it could be advantageous to switch over to traditional. After retirement, you can choose your taxable income by selecting how much to pull from the traditional first and then using ROTH funds for the remainder of your budget.
1:28 Too bad the scenario he draws Roth vs traditional is completely bogus as it's an unfair unbalanced comparison. He unwittingly stacks the deck favoring Roth: $2.5 million traditional vs $2.5 million Roth is not an apples to apples comparison as he blithely ignores the tax required to fund the 2.5 million Roth: $200 month = $2,400 year = $96,000 40 years total contribution : $2.5 m / $96,000 = 26.0417 growth. in 22% tax bracket: [$96,000 / 0.78 =] $123,076.92 pretax income needed to fund $96,000 Roth contribution : $96k * 26.0417 = $2.5 Million Roth spendable $123,076.92 * 26.0417 = $3,205,128.21 traditional: *if* entire $3.2 M traditional taxed @ 22% then $2.5 M traditional spendable, so tied with $2.5 M Roth *If* entire $3.2 M traditional taxed @ 12% then traditional beats Roth
@@alrocky🤔 your 3.2 million ain’t coming out at the 12% bracket. Your social security is going to be half of the 12% bracket by itself. Don’t forget your year 1 RMD on 3.2 mil is over 130k. That alone just put you into the 24% bracket. Also have fun paying increased Medicare premiums. Heaven help you if you have any other sources of taxable income.
@@DeepFriedLiver That's really beside the point as DR is foolishly or incompetently making a bogus comparison. His premise is flawed so any conclusions are worthless.
It's going to be so much easier not paying taxes on what you pull out of Roth. With a Roth, the amount you see is what you have. With a traditional IRA, a percentage of what you see as your balance is going to be taxes.
Sure it's easier but not like it's super hard to check your statement and calculate how much of it is going to taxes. I'd still rather optimize and make the decision of whether to do Roth or Traditional based on what gives the greatest return.
This analysis missed the point that the Roth contributions are taxed at your marginal tax rate, the your aggregate 401k balance will be taxed at your effective rate (which likely will be lower). Smart plan is to have finds in both.
I think the right decision is to contribute to both roth and traditional personally because you cannot predict future taxes and you get the benefit today of the traditional. Of course I'm not a licensed financial professional, so take this opinion how you will.
This is my fifth year after retirement. I’ve been following the 4% rule thing, but this isn’t really how hard I expected things to be. I still have about $460k outside funds in my IRA to invest in stocks. Pls how do I take advantage of the market turnaround?
A lot of folks downplay the role of advisors until being burnt by their own emotions. I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
There are a lot of independent advisors you might look into. But i work with Nicole Desiree Simon and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
So that bit at the end about people not adjusting for taxes roth vs traditional doesnt make sense to me, because, at least the way my plan is set up, it takes a percentage of total pay and contributes that to the 401k of choice, so a 100 dollar contribution would end up only being somthing like 75 in the roth. Unless you bump up the percentage until you get a dollar amount you're happy with, i dont see how it's tricking you into putting more away for retirement.
I understand this lady what she meant. If we are in higher income bracket, you can save 22% or more in tax if you put everything in traditional. But once you retired you just get enough money to live on and convert some of it from traditional to Roth IRA to stay in 10-12% marginal tax. A little bit of work but mathematically you save more in a long run.
@@michaelrasmussen8624 no duh that what the person is talking about. You can decide how much to convert to stay within those tax brackets. You will always pay taxes on that money either way roth or traditional.
Everybody does understand that the higher tax rate is only paid on the income above that threshold, right? A fraction of the total income. Someone very wise once said...the problem is not that you're ignorant; it's just that you know so much that isn't so.
@@jcj6892 I'll tell you how. You just add what you save back into your contributions, like Dave claims no one does (I do). That way you pay a 10-12% tax on money that's that much higher anyway, unless you plan it out to take smaller distributions and be taxed at a much lower rate. Roth is for people who can't plan their retirement, traditional is for people who can take advantage of the tax deferrals now and minimize taxability later.
@@jcj6892 easy because all you have to do is invest the tax savings instead of spending it. Dave tell people to do Roth because he knows a majority of people are too dumb to do the math and actually know how it works. Here is an example, I live in California and my marginal tax rate is 44.3% so if we take the 401k and i do $22.5k I save almost $10k in taxes that I can then invest more than I would if I went Roth assuming the same investment with Dave's return numbers of 12% over 40 years comes out to be ~$7.6 mil on top of the $15.6 mil in the 401k account. So if i went Roth I'd have $15.6 mil tax free but going traditional I have in total $23.2 mil which if we take into account the 12-15% tax rate if we do conversions to stay in that bracket I would have an extra $7.6 million. Also if you live in an income tax state and move to a state with no income tax or where they don't count retirement income in your income taxes you essentially never pay that state tax.
Investing in a Roth IRA is a great option because it's funded with after-tax dollars, allowing your contributions to grow tax-free over time. When you retire and start taking money out, you won’t owe taxes on your withdrawals, helping you hold onto more of your savings. I personally retired with $5 million.
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Finding financial advisors like Rebecca Nassar Dunne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Wealth is built in both bull or bear market and also wealth transfers from the impatient to the patient. One of the best ways to succeed in crypto is by trading your assets with a good strategy,...,
I want to compliment you, you have said it all. I am a little business owner and I really want to expand my business to the next level by making myself an investor but I really don't know how to go about it..
Dave is wrong, RMD now starts at age 73 1/2 not 70 1/2. Not that it makes much of a difference. Your investments in the traditional IRA keeps growing in value.
So you take RMD's starting at age 73 with more money because of the 3 extra years of growth. Your RMD will increase each thus adding more taxable income. If you are not careful RMD's can add alot of taxable income. Just something to be very aware of in retirement. A roth IRA has no RMD's and is tax free. A roth 401k has RMD's but you can contribute more than a roth IRA.
@@stevenporter863 Exactly what will be your income the day after you retire? 1M? 2M? try zero. You can withdraw all of it and create a huge tax bill for yourself.
So many people withdraw money from Roth more than 4% per year because it is tax free. If they had Traditional IRA, they would withdraw less. Why Dave never mentioned 4% rule?
Ramsey is WRONG. He was onto something with the fact that to put $100 in Roth, you must commit $130 of your pre-tax income (depending on your tax rate). However, to put $100 into your Traditional, you only need $100. Now, let's compare apples to apples. Assume you have $100 of your PRE-tax income to invest. Also, assume we want to put an equal amount in Traditional and Roth to make it easier to compare. To put $70 into Roth, you'll spend $30 on taxes. With Traditional, you put $70 in and still have $30 pre-tax left. Let's cast it and tax it: $30 before tax turns into $21 cash post-tax. You can invest the $21 as well. Thus, with Traditional, you have $70 invested pre-tax and $21 invested post-tax (the profit on it will be taxed again in the future at a lower tax rate due to long-term holding). With Roth, you only have $70 invested. Now, take into account the miracle of compounding. Because of long-term compounding, it is MUCH better to invest more money now than later. If you run the numbers, you'll see that in most cases, Traditional beats Roth long-term, EVEN given the fact that you'd need to pay additional tax on profit from your post-tax $21 investment down the line and even if your tax rate in retirement is high (40%). Traditional beats Roth from the sheer compounding over time from your pre-tax and post-tax investments. The big question is, will the tax rise over time, and how much it’s gonna during retirement? The trend so far is that the tax is going up. However, it is also very likely that governments and states will compete for people just like businesses and offer better conditions in the future. However, predicting 30 years in the future is hard. Don’t trust anyone on this.
You put the same amount in. If you put it in a Traditional account, at the end of the year, your taxable income is lower. If you put it in a Roth account, your taxable income is not lower and depending on your income and deductions, you may have a slightly higher tax bill. Years later in retirement, all your withdrawals from your Traditional account must be figured into your taxes, and at age 73, you are required to take a certain amount out (required minimum distributions) Nothing in your Roth account is taxable in retirement and there are no RMDs. If you pass it on to your heirs, they have 10 years to sell/transfer out of the Roth account.
Hey Ramsey show, you better take care of those scammers in the comments, otherwise people will blame you for bad things. And not all of them are smart as you know, to stay away.
I contribute to both roth and traditional Roth will be used for large purchases when i retire and my traditional will take care of living expenses and whatever else
If you’re over the income limit for a Roth IRA (153k single & 228k married) then you can only contribute to a Traditional IRA. Roth 401k anyone can contribute to.
If you are too high of a tax bracket for a Roth IRA because of the income limits. You can contribute to traditional and then convert the assets to Roth. It's what's called a backdoor conversion and is completely legal. Ask your investment firm about it and they can help you set it up !
Thanks for your input. Just one more question, I have already paid taxes on half of my retirement. It's not in a Roth or IRA? Unfortunately I never thought about opening a Roth until last year.
I will be 65 in January and will retire along with the wife 4 months later in June. I have a work 401K and plan to roll it over to a Roth IRA when I retire. I also have another retirement savings I plan to roll that over too. But I’ve recently come across one of my stocks that’s tripled and plan to sell it all except for 100 shares. Should I take that and open my Roth IRA? That way I’ll have it already set up for transferring my retirement accounts to Roth IRA.
I put every extra nickel into traditional instead of after tax money into roth so probably ended up with an extra $200,000. I won't pay that much total taxes until mid to late 80s. Family history has me gone by then.
Dave is right and wrong at the same time, it all depends on your income at old age. if your expecting to be a high earner at retirement with a lot of passive income (business owners, real-estate/property owners, investments) then ROTH IRA during your working years is the best path. If your someone with a regular 9-5 and dont expect to have high residual income during retirement (meaning your total income during retirement is less then 100k) then Traditional is your best bet because your going to get taxed at your margin income bracket during retirement. $22,001 to $89,450 = 12% of amount over $22,000. Please remember that Dave's Advise is predicated on the fact that he expects you to be a high Income earner at retirement.
Not really. Here's an example: A person put in 22,500/year for 30 years (monthly contribution). With an interest rate of 9%. That comes out to be 3,432,644. Of that total amount, 675,000 is the contribution. Assuming his/her effective tax rate is 30% currently (that's the effective tax bracket for someone with an income of 900,000). The total tax per year for that contribution (if the contribution is going into a Roth) is 675,000 / 30 *0.3 = 6,750 per year (or 22,500 * 0.3 = 6,750). Minimum distribution from the 3,432,644 401k account is 126,200 per year @72yo. At that income, the effective tax rate is 15% or 18,930 per year >> 6,750. It's wiser to pay the 6,750 tax right now to prevent a 18,930 tax bill at retirement. Also note I only use 30 years (as if someone started 401k contribution late in the game). The more time, the larger the gap. Now if the market rate is
I agree. If you make less than 100k in retirement (and especially if you make less than 60k), traditional IRA will almost always be better for the reasons you said.
Dave gives rather poor advice when he talks about the two options. He never accounts for the money that you saved UP FRONT when doing a traditional contribution. That money doesn't just disappear into thin air. You can actually INVEST those dollars that are now sitting in a taxable account. So your Traditional IRA/401k is your Traditional Balance + the "outside" money you saved and invested. Compared with Roth which is just the Roth Balance and NO outside money. The comparison has to be COMPLETE to make sure you know which is best for your situation. They both have pros and cons, and you need to choose the one right for you. It isn't as simple as just "choose Roth".
The passive income from investments doesn't really makes sense if we're talking about stocks because those are counted as capital gains so if you hold them for over a year or are getting qualified dividends then these are not taxed as your ordinary income so that's really comparing apples and oranges.
I have a friend retiring, we both do very well financially. She said she was shocked that she qualified for ‘ObamaCare’ because her retirement accounts were Roth and do not count as annual income. Another perk to saving in Roth… for now (laws always change) you can actually retire in that 59.5 to 62 year old range and not have to worry about health insurance!
@@stevenporter863 You're not counting all the taxes you paid every month on the Roth contributions. You have to compare the two in that light in order to make it a fair comparison.
I heard something and want to confirm this is true. For the 401k the 5% "Match" by the company is always TRADITIONAL is that true? Sounds like the best plan is to do your contribution as 100% ROTH (up to 5% it's matched with 5% Traditional) but anything above just goes into your Roth.
I am at the beginning of my "investment journey", planning to put 85K into dividend stocks so that I will be making up to 30% per year in dividend returns. Any advice?
Investing without proper guidance can lead to mistakes and losses. I've learned this from my own experience.If you're new to investing or don't have much time, it's best to get advice from an expert.
Yes, I agree. I use a financial advisor too. Same person since 2020. I don't worry about whether the economy is going up or down or sideways. I always ride through.
@@DonaldStokes-p I really want to get in with a financial advisor this year, especially as all markets are hitting lows. I don't want to be too optimistic and end up losing everything.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Roth for sure is king in your early years of saving, because your probably not in a high enough tax bracket for the tax savings to matter and you have a long time for that money to grow. But if you are getting close to retirement a traditional might make more sense as your probably in your peak earning years and there isn't as much time for the money to grow before retirement. Where the transition is, is a tough call and depends on each individuals income and savings journey.
Well the growth doesn't really matter on the account type but more what the investments are. Also over the past 10 years we had one of the longest bull runs in history so pretty much anyone investing in the market was making money.
The only part he is missing is this. To contribute 96000, you are taking taxed $96000. So you had to make more like 115,000 or 120,000 to contribute that 96000. So a 96000 Roth contribution is more like 115,000 Traditionl contritbuton. Either way you you took 115,000 of your salary and put it towards your retirement. Also the tax implications of having a higher taxable income when contributing to a Roth. This is why you do both though.
I love that in this video Dave is basically saying if you read between the lines "my audience is full of financially dumb people so I have to keep my advice super simple even if it's not optimal because they can't deal with the nuance of taxes" Roth is not always best but it depends an several different factors which most of the audience is not gonna understand or want to understand. If you want to give a very generic blanket statement that Roth is good sure but doesn't mean it's always better than traditional.
@@anthonymejia2481 it’s not that there are dumb people so without Dave Ramsey they’d be doing worse. The problem is Dave doesn’t teach people how to think about money just basically says don’t think or do the math and follow my system because everyone else is wrong. The dogmatic way people follow him as he basically is calling them dumb is what boggles my mind.
@@damondiehl5637 like they matter in what sense? Do FPU and the baby steps help people who know absolutely nothing about finance sure BUT it also gives them so many misconceptions and doesn't actually teach you about finance they just follow the cult of Ramsey. I wish people would actually learn about finance, apply it to their own personal situation and do what is best for them but Dave only gives huge blankets statements that don't apply to everyone.
The downsides of Roth is that there is an income limit for contributing to a Roth IRA, that your invested money is tied up until 59.5 years old, and that you can only put in $6,500 per year. Other than that, they are the best retirement account that exist
False. You can withdraw money from a Roth tax free every 5 years from when you deposited the $6000. You cannot withdraw the EARNINGS. The traditional, it is tied up.
@@FrankS111 You can contribute a lot to a traditional, BUT you're going to pay it almost all in taxes. Say I put it $6k every year til 65 and assume I am...22. I have 43 years of $6000 AND I invest that in 10% growth stock mutual funds. I would have like A LOT. Traditional, you contribute what is it? Like $20k something? You invest it in 10% growth stock mutual funds. You are going to be paying a crap load in taxes (principal AND earnings are taxed). Roth you do not pay any tax on anything in retirement.
No we have roth 403b, and can contribute 22,500 a year, and can start to withdrawal at age 55 instead of 59 1/2 penalty free if I choose to retire then, which with my pension I can withdrawal that at 56 so it's possible.
You are confusing an IRA with a 401k/403b. The contribution limit for an IRA, Traditional or Roth, is $6500. The contribution limit for a 401k/403b, Traditional or Roth, is $22,500. You can have both an IRA and 401k/403b, and either of those can be either Roth or Traditional, unless you make more than the income limit for a Roth IRA of course. @@wewhoareabouttodiesaluteyo9303
Yes it's prudent and as you noticed quite evident to contribute to traditional 401(k). Favor contributing to traditional 401(k) when at relatively high tax bracket and favor Roth 401(k) when in low tax bracket. As default contribute $7,000 to Roth IRA and as much as you can to traditional 401(k).
One thing he didn’t address is compound interest/growth. If someone is contributing a certain percentage of their paycheck, where the amount is like his example $100 vs $130 contributed… let’s multiply that by 5: so $500 monthly in a Roth 401k vs $650 per month in a traditional 401k. Let’s start at age 20 and go to 65 with a 10% return. Traditional will net $6,870,306. Roth will net 5,284,928. So the traditional account will have an extra 1,585,378 sitting there to earn you even more compound growth/money. It’s not going to be removed in a lump sum either on your retirement date so I don’t understand why he faulted the woman’s advisor for traditional. He thinks being taxed later so you can use that money now for compound growth over several decades is bad?? Dave often says when doing yearly taxes, you don’t want a big refund because it means you’re loaning Uncle Sam money for free. Well getting taxed now is basically the same. Why not be taxed later and invest the money for a compounded 10% return over decades??
@@MeltingRubberZ28 in my example, traditional will have 1.58 million dollars more than Roth. How many months will it take for you to withdraw 1.58M worth of your account to the point of traditional and Roth being equal? Meanwhile that extra 1.58 million will continue compounding more than paying for any tax difference. As I said, you’re not taking the whole amount out in one lump sum. You’re taking it out a little at a time: monthly, quarterly or yearly. However forget that it will continue compounding. Forget that you’re not going to remove the entire a lump sum with one check. Let’s make it worst case scenario. Write off 25% of that extra 1.58m, so 395,000 goes to taxes. You’re still left with 1.18 million more than the Roth. 15 percent pre-tax (traditional) is a lot more money contributed and more a lot more compounding than 15 percent after tax (Roth).
@mrcove1 i would have to do the math on your example as they typically break even, however there are a lot more rules with a traditional retirement account (RMDs, historically taxes always increase, etc)
1. People don't behave that way. You don't invest one amount because it goes into a Traditional account and a different amount because it is a Roth. You decide to invest XX% and then decide which type of account to use. 2. The tax later is on both what you contribute AND what it grows to. With a Roth account, all the growth is tax free.
@@damondiehl5637 1. 15% of gross pay (pre-tax, aka traditional) is more money invested than 15% of net pay (Roth). People have to invest in one or the other, so I’m not sure what you’re referring to by saying people don’t invest that way. Yes, they chose 15%. Choosing traditional means more money gets invested. Those additional investments gets compounded over decades. 2. The tax later on traditional is only taken from your withdrawals. Again, you’re going to have so much more money in the traditional account than you would with Roth (1.58 million more), that it will take decades for the account balance get down to the amount of the Roth (if it ever gets to that point). So you can withdraw more, have the tax taken out of that, and still be way ahead of the Roth.
There are a lot of considerations when making these types of investment decisions. Sounds as though this caller has availed herself the services of a financial advisor who seems to be making the right moves. Dave also engages in a bit of disingenuous trickery by using two different contribution rates in his comparison of Roth vs Pretax. Yes, the general rule of thumb is Match > Roth > Pretax. However, Roth vs Pretax is heavily dependent on where you are in the retirement savings lifecycle. A young person who is early in their career and most likely at a lower tax rate would probably be better served by utilizing Roth. A later career employee who is at a higher tax rate may be better served by using Pretax - especially if they anticipate being in a lower tax rate when they are withdrawing their retirement funds. Just have to do the math, as they say.
The part that I’m confused on is the maximum income requirements , I’m 25 now making 150k a year and will be clearing 200-300k by 30 , I plan on owning 3 properties one being a multi unit rental to cash flow by the time I retire, I’d love to retire at 55 but I’m not sure if Roth is right for me , I also have a company retirement that is very competitive
Is there an income limit to fund a Roth? I’d like to max it out each year, but the searching I did seems that my income was too high to fund one. Any answers?
for a Roth IRA yes as of 2023 the max income is $153k if you're single and $228k if married filing joint. There is also a partial limit if your income is between 138k-153k for single and $218k and $228k if married. You can always do a backdoor roth while those are still allowed which basically is contribute to a traditional IRA then transfer it to a roth IRA. For a Roth 401k there is no income limit. Hope this helps.
@@whasian2007 it does help. My issue is that I made 197k last year, great income I know, but does prevent me from placing into a Roth. Unless I can do it early in the year before my income surpasses the limit. 401k is something I didn’t start taking serious until last year, but I do know the limit on that is about 22k/yr. I just want to know where I can put my money to grow the best way possible.
@@brandonwaller4328 just as an FYI it doesn't matter when you make the contribution during the year all that matters is the year you contribute and the amount you made that year. Some people have to sometimes take it out cuz they make more than expect and pass the limit. I would say the best places for growing money for retirement is either IRA or 401K then anything about the limits for those just use a normal brokerage account. Whether you should do traditional or roth depends on a lot of factors like income, location, goals ect.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
Those sound like great picks! consider financial advisory so you don’t keep switching it up, top 3 payers for the month were $OHI, $KMI, and $EDP... not bad for 350k
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a CFA, even though I was skeptical at first, and I beat the market by more than 14.3%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an advisor.
I'm intrigued by this. I've searched for financial advisers online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
I've experimented with a few over the past years, but I've stuck with ‘’Aileen Gertrude Tippy’’ for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
Wow, her track record looks really good from what I found online. I'll take a chance and see how it goes. Thanks for the info
In the simplest sense, retirement planning is what one does to be prepared for life after paid work ends. This isn't just financially but in all aspects of life.
It is also never too early or too late to start retirement planning.
Yeah, lifestyle choices such as how to spend time in retirement, where to live, and when to quit working altogether, among other things.
Bianca Harley Doran told me that a holistic approach to retirement planning considers all these areas.
I can see that she has great knowledge about investment planning.
Early in a person’s working life, retirement planning is about setting aside enough money for retirement.
My portfolio doesn’t just cater to dividend stocks. I hold $VFIAX (S&P 500 index fund) in my Roth IRA and $VTI (Total Stock Market ETF) in my taxable brokerage account. Two of my largest holdings. The individual dividend stock positions all complement the index holdings.
Thats when you hire someone to manage your money. You need a (CFP) straight up! personally, I would invest in ETF's and also love investing in individual stocks.
I took charge of my portfolio but faced losses in 2022. Realizing the need for a change, I sought advice from a fiduciary advisor. Through restructuring and diversification with dividend stocks, ETFs, Mutual funds, and REITs, my $1.2M portfolio surged, yielding an annualized gain of 28%.
Your advisor must be really good, how I can get in touch with them as my porfolio isn't doing well.
‘’Aileen Gertrude Tippy’’ is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Most of my money is in ETFs. But I do have a small allocation to individual stocks that I have a strong conviction in. Strong foundation first.
Individual stocks can beat ETFs like $VOO / $SPY / $IVV if you play your cards right
Accurate asset allocation is crucial, and some individuals use hedging strategies or allocate part of their portfOlio to defensive assets for market downturns. Expert guidance is vital for achieving this. This approach has helped me stay finan-cially secure for over five years, yielding nearly $1 million in returns on invest-ments.
I've been looking to get one, but have been kind of relaxed about it. Could you recommend your advis0r? I'll be happy to use some help
My CFA ’Amy Desiree Irish’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an email shortly.
Investing in a Roth IRA is a great option because it's funded with after-tax dollars, allowing your contributions to grow tax-free over time. When you retire and start taking money out, you won’t owe taxes on your withdrawals, helping you hold onto more of your savings. I personally retired with $5 million.
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
Accurate asset allocation is crucial. Some use hedging or defensive assets in their portfolio for market downturns. Seeking financial advice is vital. This approach has kept me financially secure for over five years, with a return on investment of nearly $1 million.
This sounds great. Is there a way I could connect with your advisor or any other whom you think is very good? I'll appreciate.
Rebecca Nassar Dunne is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
I looked her up, and I have sent her an email. I hope she gets back to me soon. Thank you
Yes, it helps that it is more flexible too, so it provides a window for mini-retirements. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that pina colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part of investing for retirement, whether using Roth or traditional. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
Safe to say not everybody has the skill to pursue investing. But it's always easy to follow the advice of someone who knows how to i.e a financial advisor. You could anywhere between 10--40k with the right ones. Online businesses are a good bet too.
I might want to try out a financial advisor this year, but the amount of information on the internet is overwhelming. I know it's not appropriate, but you could recommend a good one(s)?
I don't comfortably throw recommendations around on the internet, but I've been working with Sharon Louise Count. She's pretty brilliant! I'm sure there are others who are good, too.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
I have thought about it, but haven't figured out how to get consultation, I don’t live in a big city.
What is her fee structure like? Are her services available to about anyone? Can you share more details?
Impressive, I took a look at your advisr. I set up an appointment. I’m looking forward to her reply, I hope she sees my message.
Your income tax rate in retirement likely won't be the same rate as it is now while working...it's not necessarily the best way to go.
I just 30 this year and have just under $40k in my own 401k and another $10k between my other retirement accounts. My wife has about $41k in her retirement accounts (she is not currently working). I currently make close to $63k a year. I only do 5% though to my 401k for the company match and another 10% of my income is split between an HSA and a ROTH IRA
51 years old. I have $295,588.25 in my Fidelity retirement account. I cranked my contributions up to 35% and I do all the investing on my own. Fidelity just holds my ETFs/stocks. I made that change earlier this year. I'm hoping to end the rat race by 60 but it's looking more like 63-ish. I want to have $1.5M and bring in about $60k in dividends each year. Pedal to the floor! Thanks for the video. Great content.
As a new investor it's always great to hear from a person who has gone through all the difficult times and come ahead of it. What are some strategies i can employ to be successful?
Thank you so much for your helpful tip! I was able to verify the person and book a call session with her. She seems very proficient and I'm really grateful for your guidance
@@alexyoung3126 you’re 51 with a nest egg of ~$300k. You most likely won’t get to $1.5M by 63ish, and you sure as hell won’t get $60k/yr in dividends. As a financial advisor, I hear people say things like this all the time, but you’re better off being realistic and planning as opposed to hopping
Max your ROTH
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Really? Have you searched? Use any investor/advisor tool.
I don't reside in a large city, so I've thought about it but haven't figured out how to seek advice.
My advisor is a lady and goes by the name Melissa Jean Taligdan I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as an individual investment account or employing the services of a retirement planner/financial Advisor.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you
My CFA Julianne Iwersen Niemann, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds.
Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
Prioritizing effective personal finance management holds greater significance than the sheer amount saved, irrespective of income source. Consulting a certified financial advisor can offer tailored strategies to optimize financial results by reducing expenses and enhancing income, regardless of whether it's earned through employment or investments.
I wholeheartedly concur. At 62 years old and newly retired, my external retirement funds total around One million two hundred fifty thousand dollars.. With no debt and minimal retirement fund allocation relative to my portfolio's value over the last three years, I recognize the importance of a financial advisor. Neglecting them isn't an option; however, thorough research is vital to find a trustworthy fiduciary advisor.
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
I don’t know how but you’ve managed to package an unbiased analysis that is more entertaining than the sensationalized segment of economic and financial news. Thank you for your efforts to be the signal and not the noise. I understand that the economy is currently in a downturn and that we must wait for things to get better
I think the current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner
Exactly why i enjoy my day to day market decisions being guided by a portfolio-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not outperform, been using a portfolio-coach for over 2years+ and I've netted over $800k.
Really? I’ve actually been looking to switch to an advisor for a while now. Just never made up my mind. Any help pointing me to who your advisor is?
Finding financial advisors like Margaret Johnson Arndt who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I promptly did some research on Margaret’s past. She can control herself well. Her credentials are solid, and it seems like she was the subject of a careful examination. Foreign investors from countries other than the United States can also use her services
Indeed, that helps that it offers a window for mini-retirements and is also more flexible. I'm not waiting to be 60 and retire to some idyllic place. Knowing how to pay for the lifestyle is helpful. It's true that earning money while enjoying a pina colada on the beach is beneficial. If not, I could not have completed it.
Yes, whether utilizing standard or Roth investments for retirement, people tend to overlook that aspect. You don't take your life money and take off for Puerto Rico. Two major benefits are prudent investment and sound business judgment. Invest in real estate, stocks, and start-up companies. That is all.
It's safe to state that not everyone possesses the aptitude for investing. However, it's always simple to heed the guidance of an expert, such as a financial advisor. The range of 10-40k is possible with the appropriate ones. Internet companies are also a wise investment.
Please who is the consultant that assists you with yours and if you don't mind, how do I get in touch with them?
Monica Shawn Marti has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Thank you for sharing, I must say she appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive. I reached out and scheduled
Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
as most investing-related questions, the answer is, it depends.. my best suggestion is to consider advisory management
Agreed the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around $300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, and leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the advisr that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
SONYA LEE MITCHELL is the manager I have. Just research the name. You'd find necessary details to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
There is also no earned income requirement to convert to a Roth. As long as you have a balance in an IRA, in theory, you can keep converting to a Roth as long as you like. But how best can i compound at least $2m in retirement savings without holding cash?
Consider hiring financial advisors, estate planners or tax experts. They can provide specialized knowledge and help you navigate complex financial decisions in such as retirement planning
Agreed, It's really challenging to create a strong retirement portfolio, so I always preach about the importance of having an advisor.This helped me stay afloat and improve my portfolio 0f $450k by 90% in 5 years.They have strategies that are specifically suited to your long-term objectives and financial aspirations.
'Monica Selena Park' is the CFP that guides me, her reputation precedes the exemplary service she offers, and I'd gladly commend her on a public post, you can locate her if you are internet-savvy.
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money.
If you’re new too investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this financial planner?
I recommend Grace Adams Cook so you can simply delve deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Thank you for sharing, I must say, She appears to be quite knowledgeable. After coming across her web page, I went through her resume and it was quite impressive.
I am 27 and i just started my ROTH IRA and deposited the max for 2024! I feel stupid for how long it took to get my life straight. The problem here is, what is the best way to invest the money to grow to $1 million for retirement?
I believe every Investor should start with ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
You don't need to find the next NVDA to succeed in investing. Just choose top-notch ETFs and partner with a financial advisor like I did. I turned $100k into $20,000 in annual dividends-a significant milestone for me today.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Her name is 'Amy Desiree Irish’. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
People who are able to retire early are lucky . I have 15 months till 65 and need to look at calling it quits, my only fear is running out of funds much later, thus keen on investing. What could be the safest possible ways to invest for cashflow, in order to afford lifestyle after retirement?
consider investment planning, learning from a well experienced advisor is invaluable
Based on my own experience working with an investment advisor, I currently have $1 million in a well-diversified portfolio that has grown exponentially. It takes more than just money to invest in stocks; you must also be knowledgeable, persistent, and have strong hands.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
“LAURELYN GROSS POHLMEIER ’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
I have worked all my life without thinking about my retirement. Now my kids are growing fast, the way I am spending my savings, it has come to my attention that at my old age, I will have no jobs, no money left and no retirement funds to fall back to. So I am asking what do I need to do and how do I begin investing in my retirement. I just need professional advice. Thanks.
Could you please refer me to your expert, I will like to look him up.
@FloraGEvans I am kind of skeptical about all investments, but I have no other option than to begin my retirement plans. Please what more can you tell me about Deborah Lynn Dilling. I want to be in safe hands.
Could you please provide me with her contact details? Thanks.
I looked up her name as instructed, I found her business contact. I sent her an email her already. Thanks.
You should pray to Lord Jesus. He will provide!
Choosing a Roth IRA is advantageous as it uses after-tax funds and allows tax-free growth. When I retired, I had $3M million saved, and I won't be taxed on my withdrawals.
@bezosjesss You're right, I used a financial advisor. Approaching retirement, I've benefited greatly from their guidance. Starting late, I knew index fund compound interest wouldn't be enough. It's funny how I've outperformed peers with more years of investing experience. I've made over $870k in profits without tax.
@josephbush Please who is the consultant that assists you with your investment and if you don't mind, how do I get in touch with them?
@debwes 'Heather Lee Larioni' is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.
@josephbush I just looked up her name and her website popped up immediately, interesting stuff so far, about to schedule a session with her.
@@debwes1seems like a genuine conversation lmao
With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
Yeah, more reason I enjoy my day to day market decisions is that i'm being guided by a portfolio-coach, seeing that their entire skillset is built around going long and short at the same time, both employing profit-oriented strategy and laying off risk as a hedge against the inevitable downtrends, coupled with the exclusive information/analysis, it's quite impossible not to outperform. Netted over $1.5m in return on investment, since using a coach 2years and counting.
talking about coaching, do u consider anyone worthy for recommendations? I have about 80k to taste the waters now that large cap stocks are at a discount... thanks
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, Carol Vivian Constable turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
I just checked her out on google and I have sent her an email. I hope she gets back to me soon.
I just retired, but I am uncertain that my 401k and IRA will ensure a stable future. I have $900k set aside, I am seeking an approach that matches my risk tolerance and financial objectives. Please I need advice, should I invest in stocks or real estate ?
You should explore rosters of dividend aristocrats and select six to ten from the compilation. These esteem companies boast a remarkable history of consistently paying dividends for over 25 years. Furthermore, it is discerning to engage a financial advisor to help in crafting a meticulously structured portfolio.
I am interms with working with a financial advisor. It has really helped in shaping my retirement future. I am currently working with CFP, his expertise on wealth management and tax planing is unmatched. He has really helped in optimizing my financial growth and security. He works in accordance with my financial goals and my risk tolerance.
Yeah.. I think the first concern of any experienced financial advisor is to understand the financial objectives of his clients and the amount of market risk their clients can tolerate and working closely with them to produce a strong result.
I agree. My advisor took out the time to understand my entire financial landscape and this has earned me high net worth across all my holdings.
Please who is the advisor guiding you. I have actually been looking into financial experts lately, but I have not seen to get a creditable one.
Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
I think this is something I should do, but I've been stalling for a long time now. Mind if I ask you to recommend this particular coach you using their service?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sharon Marissa Wolfe” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Benevolence, this reference seems valid.. Just inputted her full name on my browser and found her site without sweat, 13 years of experience is certainly striking! very much appreciate it
I appreciate the mental thought to "trick" yourself in to saving more, but there are certainly many of us who moved to locations with higher taxes for work (e.g. NY or California) but have no intention of retiring here. Of course federal and state rates may change, but if I'm still getting taxed at coastal rates when I retire, something has gone horribly wrong.
*The greater the passive income you can build, the freer you will become. Taking the first step is the hardest, but 7 house later living off passive income since June 6, 2021. You've got to start taking steps to achieve your goal.*
What kind of investment would you advise? And what is the best way to follow it?
@@darlahoot209 All passive income ideas work as long as you put the work in. I focus more on cryptos, NFTs, real estate crowdfunding and IDOs. With the assistance of a financial consultant, I'm doing well for myself.
@@bradleyjones9233
Thanks for your response but how do I get access to your financial consultant? Can you share more info about him/her if you don't mind.
@@darlahoot209 You can make a quick internet research online with her name JENNIFER D. ALAINE. The rest of the information is there for you to read and get in touch.
Jennifer D. Alaine is the best in this space, I'm happy to come across these recommendations. I have worked with her and I am impressed with the thoroughness and professionalism of the investment diligence packages she provides.
The majority of people who retire have limited retirement savings. Therefore, many end up being in a lower tax bracket when they retire. However those that put more money away, yes eventually you want to have a Roth account. When someone retires, the average retirement account holds about $200,000 depending on the online source you look up. And as the years go by the brackets are adjusted to reflect inflation.
My dividend journey began when I realized that two particular expenses in my budget were always going to go up and never go down. The two expenses were taxes and insurance. I realized that the dramatic rise in both will need some added income. So, I started buying shares paying dividends. I can now see that this will be the path I need to take to make sure those two expenses will not overtake my future income.
Been rothing 100% since 2017. I never regret it
How much you put in a month?
What about the fact that all money going into a Roth is coming off the top, so at the highest point in your tax bracket. For me (married filing jointly) I am paying 22% up front for anything put into a Roth. However, withdrawing from a traditional IRA or 401k I would pay 10% up to $22k, then 12% up to $89,450. I wouldn’t be paying (the same) 22% until I take out more than $89,450 per year. So, traditional seems to make more sense unless you have other income filling the gap beyond that same high tax bracket. Social security, pension, etc.
If your career path salary tax bracket remain similar until retirement then traditional 401(k) contributions makes more sense for you. If you drop to 12% Federal Tax Bracket that'll be good time to contribute or convert to Roth.
I will be 40 in October and I have been maxing my ROTH IRA out since I was 28. I do not regret it at all. The tax benefits are almost criminal.
Some amount of taxable income is good. The reason is that you'll pay no or little taxes on at least some of the money.
I think a good strategy is to start out paying into a Roth account early in your career and when your tax bracket is low. Later in your career, when you are closer to retirement and your tax bracket is higher, contribute to an IRA.
If following the 4% rule, and depending on your tax bracket, then aim to have around 25x the standard deduction invested in a pre-tax account. You can even bump that up to the 25x the 12% limit.
There isn't much difference between 22% and 24% right now, and even that might change back to 25% and 28% soon.
I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful; By Warren Buffet.
Absurdly good advise as my mouse lingers over that sell button. I SAY NAY' i shall hold until green again .Lol
To help me prioritize on other things of life; I have been researching on a consistent and reliable portfolio manager to invest with and make good money..I hope Michelle will be of a help.
A trial will convince you!
As a rookie holding a winning trade is difficult, i was afraid of losing profit, same as holding a losing trade, i always prefer not to accept the loss and hope it gets back to even so i can get out with no loss. With Michelle Christine Parker, as a professional mentor i was able to know a good market to invest in.
@AndrianWiener Thanks a lot , I just googled her up
I’m currently retired, and considering the current rollercoaster nature of the stock market, I decided to stay on the sideline for awhile, now I’m worried with the numerous bank failures as of late, am I better off reinvesting my savings in the stock market or do I wait?
there are numerous intriguing stocks across various industries that might catch your attention, but it's not always advisable to act on every prediction. Therefore, I suggest that you work alongside a financial advisor who can help you determine the best times to buy or sell the shares or ETFs that you are interested in.
I have maintained contact with a financial analyst since the inception of my business. In today's dynamic market, the challenge lies in determining the opportune moment to purchase or sell when investing in trending stocks, a task that may seem straightforward but can prove to be quite challenging. With a portfolio that has increased by over $900k in a relatively short span of one year, I have delegated the responsibility of selecting entry and exit orders to my advisor.
@@Derekhoffman312 Your experience sounds fascinating. Would you be able to recommend a reliable advisor whom you have consulted with?
“Vivian Carol Gioia”, my financial advisor, is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field.
I set up a call with her and am really grateful that I did. I copied and entered her name into my browser and it came up in the top search results. I've seen comments about advisers but not one who looks this amazing.
What I love about the Roth 401(k) is it can help you save on taxes in retirement. Not only are withdrawals tax-free at 59 1/2 , it won't impact the taxation of your Social Security benefit and Medicare premiums.This is an important aspect of a Roth account that most people are not aware of.
yes right now I prefer the Roth 401k! Because I am paying 19% in taxes on my Roth contributions. That is for state and federal combined.
19% combined state/federal means you're in 12% Federal Tax Bracket making less than $45,000. If you can afford to do so you should also favor contributing [$6,500] to Roth IRA every year.
@@alrocky Wouldnt things like marriage / head of household / children/dependents affect tax brackets? My federal tax bracket is rather low as head of household with 2 children even though my income over 100k/yr.
@@jamesscott8930 Q1 Yes. My post refers to filing Single. Carandiru's 19% S/F combined would be 12% FTB MFJ making less than $90k.
It's essential to understand that with a Roth account, you won't receive a tax refund. That's precisely why traditional accounts are a better option. In both types of accounts, you will be taxed, but the difference is that with a traditional account, you'll get the advantage of a tax refund.
I,ve always looked at the math and figured that the money I did not pay in taxes on a traditional 401k would gain compound interest over the years and put me ahead enough to pay the taxes. Causing people to save more and then say you have more because of tax difference I don't think is that much superior. It is not a bad strategy but just a different one
Calculate yearly taxes go up not down nor stay the same 🤷🏽♀️
The S&P 500 moved 8.9% higher last Month, achieving one of its best monthly performances in history.. which is an indicator for profits to continue to improve. I just want my money to keep outgrowing the inflation rate. I'm still looking for companies to make additions to my $500K portfolio, to boost performance. Here for ideas...
I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
Agreed, It's essential to diversify your portfolio. While quality stocks are a solid foundation, you should also consider other assets to spread risk. Thankfully, I can attest to the success of this approach aided by professional guidance seeing my portfolio of $330k grow by 29% this year alone... maybe you should do the same.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
I work with Elisse Laparche Ewing as my fiduciary advisor. Simply look up the name. You would discover the information you needed to schedule an appointment.
Thank you for the lead. I searched her up, and I have sent her a message. I hope she gets back to me soon.
I've been reconsidering my retirement strategy, questioning if my 401(k) and IRA are enough for a secure future. I’ve also invested $300K in the stock market, but the returns have been inconsistent and modest. I'm looking for an investment approach that better aligns with my risk tolerance and financial objectives.
Using a 401(k) or IRA is a valuable strategy for retirement planning, providing potential savings growth and tax advantages. While the stock market is promising, expert guidance is essential for effective portfolio management.
Opting for an inves-tment advisr is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a year now. Starting with less than $200k and being just $19,000 away from making half a million in profit.
I've stuck with "Graham David Fullerton" for 4 years now, and his performance has been consistently impressive. He’s quite known in his field, you can confirm him on the internet.
I just checked him out on google and I have sent him an email. I hope he gets back to me soon.
Scam Alert.
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $300k, but I'm not sure how to go.
Currently, my primary worry is how to increase revenue during periods of quantitative easing. I cannot afford to witness my savings dwindle away.
That’s true, Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, , and in just a few months, I was able to earn over $950K in net profit from high dividend yielding stocks
Please can you leave the info of your investment advisor here? I’m in dire need for one.
She appears to be well-educated and well-read. I ran a google search on her name and came across her website; thank you for sharing.
It's essential to understand that with a Roth account, you won't receive a tax refund. That's precisely why traditional accounts are a better option. In both types of accounts, you will be taxed, but the difference is that with a traditional account, you'll get the advantage of a tax refund.
I lost over $80k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Charlotte Miller.
She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states
I'm surprised that you just mentioned and recommended Charlotte Miller, I met her at a conference in 2018 and we have been working together ever since.
The very first time we tried, we invested $1000 and after a week, we received $5500. That really helped us a lot to pay up our bills.
I'm new at this, please how can I reach her?
I just withdrew my profits a week ago, To be honest it was an amazing feeling when the profits hits my wallet I wish I could reinvest but, too much bills
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. Compounding is the process of earning interest on your initial investment, as well as on the interest that investment earns. This means that over time, your investment can grow exponentially. So the earlier you start investing, the more time your investment has to grow through compounding.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
@@greekbarrios I completely agree; I am 60 years old, recently retired, and have approximately $1,250,000 in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.
@@Ammo-Hoarder This is exactly how i wish to get my finances coordinated ahead or retirement. Can I get access to your advisor?
Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. "Jill Marie Carroll" is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
@@Ammo-Hoarder This is useful information; I copied her full name and pasted it into my browser; her website popped up immediately and her qualifications are excellent; thanks for sharing.
It works out exactly the same if tax brackets are equivalent.
Assuming a 25% tax rate.
$100k pretax turns into $2M (then becomes $1.5M) and
$75k post tax turns in $1.5M.
The real trick is what Dave says at the end: you trick yourself into saving more. And you are in a good position in the case that your tax rate goes up.
You are right, but it is only right if you stop investing at the time of retirement. However, if you keep investing, your 1.5 millions is stilling growing without paying a penny in tax. If you have a few millions, you can live off from the growth/interest/dividends for the rest of your life and no need to worry about your principle running out. Sweet!!!
Plus, you are not forced to take money out (RMDs) with the Roth while you are with the Tradition.
Except the tax you save is off the top and the tax you pay is aggregated.
Good example. I agree. Roth and traditional are exactly the same if tax brackets are identical. With that said, it's bad to have too much in Roth. In your example, you have 1.5M in roth. Assume you withdraw 60k a year, which is your only income (plus social security). About 26k would be tax-free anyway (due to the standard deduction), so you got no benefit for it. You would be better off withdrawing 26k (or perhaps more as you're in a low bracket) from a traditional and the remaining from a Roth. Dave suggesting putting all retirement in a Roth your entire wirking career is almost always bad advice.
I'm so tired of trying to convince the Rothers to do the smart thing.
Seriously, go ahead and pay more taxes for less retirement. It can only help me.
@@joeb1522never thought of that. Good point i no longer have a desire to convert everything to Roth.
My tax bracket will be lower when I’m retired, so traditional seems better for me. This is primarily because I started late putting money into a 401k.
For people who start early and make less should absolutely do a Roth.
How late is late? Do you mean you started in your 40s or 50s?
@@Sam-tg4ii I started at 39
The caller has a great voice for prerecorded messages or audio advertisements.
Maybe she’ll get a job doing that which would put her in a higher tax bracket and make the Roth make more sense lol
Dave is kinda sorta right but he makes it sound more complicated than it is. If when you retire you are in the exact same tax bracket as before, the Roth and the Traditional will be equivalent. If you are in a higher bracket the Roth is preferable, if you're in a lower bracket the traditional is preferable. The thing that makes it tricky is that you might not be able to predict what your tax bracket will be in the future.
They’re not quite equivalent, the Roth would only be taxed at the same rate but only on the initial investment and not the growth. the traditional investment would avoid the tax initially but the growth and the principal would all be taxed
Agree with you Tim. The discussion about tax brackets in retirement ignores the tax-free growth you get in the ROTH. And if you invest long enough, most of the money will be growth.
The way I always think of it is there's a reason why the gov't lets you put 23k in a 401k and 6.5k in a ROTH. The ROTH is better!
@@timmilowic871 But the amount that would be taxed initially in a Roth would be able to grow as well as long as the money that would have been taxed is contributed in the Traditional. If tax rates were flat and never changed, and the amount invested into the Traditional includes the amount that would have paid in tax upfront plus would would be put in a Roth, then the Traditional = (Amount*growth)*(1-tax rate), while Roth = (Amount*(1-tax rate))*growth. Of course, if your employer offers Roth options inn your 401k and you are able to make the max contribution of $22,500, then maxing out Roth is better than maxing out Traditional, as that is a de facto higher contribution.
It all comes down to whether taxes would be higher in the future. I personally like a mix, as I don't expect to be working in retirement and there will be some money that is protected in the lower income tax brackets, as I assume the Progressive Tax structure will remain, with those brackets moving up with inflation.
@@timmilowic871 yes, traditional will tax on all the earnings but Roth will tax now from the potential earnings in the future.
For example, I use traditional 401k to save 8% a year and then invest them in a brokerage account so I can manipulate the tax rate even further.
If I choose Roth 401k, no tax on the earnings but I will lose 8% each year regardless of how my investment is doing.
@@timmilowic871 other people have already explained this, but OP is correct. They are equivalent.
Roth makes filing taxes easier in retirement as well.
Indeed.
The IRS want nothing to do with them according to my CPA and the IRS.
That part!
@@blackworldtraveler3711I will think so because you have already paid taxes on the principal in your Roth.
@@jbarkley4938653
Many of my coworkers didn’t understand that over 25 years ago.
We didn’t have Roth yet but we did have aftertax and pretax contributions.
I decided to go 99% with aftertax then switched to 99% Roth when it was offered.
Always thought 25-40 years of tax free dividend/interest reinvesting,compounding,and growth was better than pretax.
Why are IRA contribution limits kept so LOW ($6K/$7K)? They should be made the SAME as 401k limits so that folks without a 401K can be on equal footing! Somehow this video has helped shed light on some things but I'm aiming to create a portfolio worth not less than $2m before I turn 60.
A solid strategy can be a key component of an investor’s portfolio. Well, the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.
Yes true, I learnt that in 2020, when I lost almost everything. But I switched to using a financial advisor and I've been returning at least $98k every month so I’ve been sticking to investing via an Advisor.
I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
My consultant is NICOLE DESIREE SIMON She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Great video, but I like to point is not always a no brainer and all advantages to choose Roth over Traditional IRA. For a person who started doing traditional IRA and not Roth till mid age says 55, and have accumulated quite a large amount in the traditional IRA, it can be a bad choice to convert to Roth IRA at that time by listing to the "Roth is always better than Traditional" advice and hoping to get tax free withdrawal later. The reason is that, after the conversion of the traditional IRA potentially in high tax bracket being still employed, your investment capital is reduced by the tax you pay at the conversion. After that reduction of capital, even though overall paying no tax later on withdrawal and it seems you will pay a lot tax later with traditional IRA withdrawal, BUT - your remaining Roth IRA amount after the conversion won't come out ahead on the total value later. That traditional IRA without paying tax now will generate more money as it's a bigger capital.
What Dave's example misses is that you have MORE money to invest with a tradional IRA rather then a ROTH. He said: "You have 90K to invest, it turns into 2.5 million, which is all taxable" - which is true. However, if you put your money into a ROTH, (assuming it's the same input), you would be taxed up front, so instead of 90K to invest, you would have maybe 70K to invest after you pay the taxes up front (standard IRAs you don't pay any taxes up front). So, assuming it's the same investments, instead of 2.5 million in the end, you probably would have 2 million, because you invested less to start, and have less to compound. He does not factor that in, and that is BIG. So yes, you pay more in taxes in the end, but you also earned a lot less, so it probably comes out more as a wash then as he states it.
But if you get pretaxed aren’t u paying less in taxes, aren’t taxes just going to go up as u get older
He does start to mention this at 3:19. Dave's point (I'm not a huge Dave fan, btw. I do dave-ish) is having traditional earn more than Roth requires that you put in more. If you put the same $100 a paycheck, Roth wins every time. Dave does frustrate me often with the Roth v traditional argument because he usually doesn't mention this.
@@Ethan-ls4cl That skips past the tax savings, just like Dave did in this video. The extra money cannot just be ignored as Dave tries to rationalize. $100 after tax in a 20% bracket means that $100 cost you $125 in pay. That $125 could go into a traditional.
Or, you do a literal $100 each: putting $100 in the roth cost you $100 after tax. but putting $100 into the traditional only reduced your paycheck by $80. meaning if you had $100 in after tax already for the roth, you now have an extra $20 to do something else with the traditional, like pay down the mortgage or invest or ross into a roth IRA, etc. Whatever you do with it, that $20 helps out somewhere. Dave acts like this extra money just vaporizes when he actively teaches his followers to do something with every bit of their money. There is no way it would go to waste.
Math will be the same if you do IRA or Roth IRA if the tax rate and growth rate the same for both situation. However, having a large IRA at retirement age can pose other problem such as RMD.
@datbio7302 is correct:
FV=P(1+i)^n, or P*K where K=(1+i)^n.
For T-IRA,
FV=P*K-Tax%(P*K), or
FV=P*K(1-Tax%).
For Roth,
FV=(P-P*Tax%)*K, or
FV=P*K(1-Tax%), same result if you can live on your required T-IRA RMD and taxes are lower on your RMD than when you contemplated a Roth. You can likely live on your RMD if your house is paid off. A 60 year old today doesn’t start a RMD until 75 and the RMD is P/24.6 years. At P=$5M, you’d have to take out and pay taxes on $5M/24.6 = $203,000/yr, and Ramsey would be correct if your salary was below this when you had had the chance to go Roth. If your P=$2M, however, your RMD would be $81,381/yr, and that, if you can live on it assuming you don’t have a house payment, is likely lower than than the salary you had when you were contemplating the Roth. The funny part is that Ramsey extracts back for us near his age to a day there were no Roths, and tries to predict your career salary and future tax rules for you as a new member of the work force.
All in all, though, he has basic sage advice to the point I have sent one of his recordings to my Daughter and said, “Please. Listen to what he is saying here!”
FYI: There is also no required minimum distributions on a ROTH 401K either
My biggest concern on this discussion is with the way government spends now and how innovative they get trying to tax more whether when I retire 40 years from now will they decide the “rich” who were financially responsible will have to pay taxes on that post-tax investment anyway. I think a lot of this is trying to predict the future where lots of potential complex changes to tax laws confuse me.
They absolutely could, but I'm betting you'd see taxes increase on income, pre-tax accounts and capital gains tax from brokerage accounts first.
The year 2026 will be the one to watch.
Yup, and don't forget the probability of wars and that that can do to retirement accounts and tax rates
I love the information but it is very situational, for instance we make to much to put money into a IRA which means 401k plans are the only tax advantage we can have. Currently we are maxing out two plans to try and get the liability down even though to make sense. Falling into a 32% tax bracket to me does not make sense to put it all into a Roth 401k.
I am right there with you! If I went Roth I would be eating alive in taxes.
An argument in favor of traditional IRA is the way states tax income in retirement. A lot of states offer at least some (state tax) break on retirement from a traditional IRA. NY (where I live) has very high income taxes, but you pay no taxes on the first $20,000 of IRA income in retirement. So, at least in NY, there is a possibility that some of the traditional IRA funds will never be taxed at all. They will of course still be taxed by the federal government.
Also speaking of state taxes if you put money into traditional then you save on both state and federal taxes and say you move to a different state in retirement you avoid those state taxes altogether.
In the 6:22 minutes I never heard him ever mention the part where you are lowering your taxable income with a traditional.
Cause it's a lie
You are just deferring tax, not avoiding it
@@ab3040 Whats a lie?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing below the $100k mark and in the first 2 months, my portfolio was reading $234,800. Crazy right!, I decided to reinvest a huge percentage of my profit and it got more interesting.! For over a year we have been working together making consistent profit just bought my second home at the beginning of summer.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@EthanCarter-n2y However, if you do not have access to a professional like Suzanne Gladys Xander, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@Bestjudy001 Oh I would love that. thank you.
@EthanCarter-n2y Suzanne Gladys Xander is her name .
Lookup with her name on the webpage.
This confirms I made the right choice when I started working in the government in 2021. After only 3 months in the job, I switched from the traditional to roth and have no plans of going back 👌
My growth of 401k is 2.74% in the past year. In this environment does investing under a brokerage with a custodian outperform a 401k? should I seek a pro to grow my funds on brokerage acct or still hold? I have 5 years to retirement. Glad to discuss.
Mine was 8.16%, I used to dca into etfs but I reconsidered the strategy since I am still way behind after the massive downturn since Jan last year
Be careful not to be lured into the market too soon, this current situation has really opened my eyes to the importance of a good mentor on YT or elsewhere knowing what they are doing .
@@TariqTrafficante who is this manager you use? I lost over 50000 already this year with Edward Jones. Im in need of guidance from a private financial-planner going forward.
@@TariqTrafficante how can I reach out to this person if you don't mind and how much have you profited relative to fees?
@@CeeRiplayis I did some findings on the Loren lady, she seem to know her stuff. educational background, qualifications was really impressive. Kudos and thanks for sharing. I left a note, wrote an email for a consult and set up a call. Thanks 4 thisTariq.
It’s important to fund both, but fully fund the Roth every year no matter what.
Really this question doesn't matter. Fund both. People who save a lot are doing that anyway. Try to max Roth (post-tax), HSA (pre), and 401(k) (pre). If you have kids max an ESA (2k limit - post tax).
Contributing $6,500 to *Roth* IRA every year and (as much as your income and budget allows) up to $22,500 to *traditional* 401(k) is good default choice.
I'm a financial advisor. Depends on the person and state, and many other things. Some people traditional is better, some, Roth. Usually doing traditional is best during highest earning years prior to retirement, then when you retire, get residency in no income tax state, wait on social security, and do large Roth conversions up to your target bracket. If your advisor isn't doing this work (which can save you millions in taxes + compounding of savings) they suck.
Do the trad accounts that perform better need roth conversions?
Dave, I so wish I would have been listening to you well before I retired. I did fairly well on my own but I also made the assumption that I would be in a lower tax bracket in retirement. About 1/3 of my savings is in Roth, the rest is in a Traditional, both are rollovers from my 401k and I have converted some to Roth in the past few years. I have pensions including social security totaling just over $100k/year, a $340k mortgage at 2.25% on a $740k home in Utah (my only debt), and savings in IRAs of $1.2M. Should I use my Roth to pay off my mortgage?
Would u sleep better being debt free?
Is it a fixed mortgage? If so, you're probably better keeping the money in the market. But have an emergency fund in Treasury bonds in case things go bad.
If it's a variable-rate mortgage, pay it off. You'll sleep better knowing that there's no risk your rates will hike.
Having some in each is actually not a had deal. When you are young and in a low tax bracket, max out ROTH. A few years before retirement when you are in a higher tax bracket and don't have as many years for the money to grow, it could be advantageous to switch over to traditional. After retirement, you can choose your taxable income by selecting how much to pull from the traditional first and then using ROTH funds for the remainder of your budget.
This is BY FAR the best explanation I’ve heard of why roth beats traditional. Thanks Dave!
1:28 Too bad the scenario he draws Roth vs traditional is completely bogus as it's an unfair unbalanced comparison. He unwittingly stacks the deck favoring Roth: $2.5 million traditional vs $2.5 million Roth is not an apples to apples comparison as he blithely ignores the tax required to fund the 2.5 million Roth:
$200 month = $2,400 year = $96,000 40 years total contribution : $2.5 m / $96,000 = 26.0417 growth. in 22% tax bracket:
[$96,000 / 0.78 =] $123,076.92 pretax income needed to fund $96,000 Roth contribution : $96k * 26.0417 = $2.5 Million Roth spendable
$123,076.92 * 26.0417 = $3,205,128.21 traditional: *if* entire $3.2 M traditional taxed @ 22% then $2.5 M traditional spendable, so tied with $2.5 M Roth
*If* entire $3.2 M traditional taxed @ 12% then traditional beats Roth
@@alrocky🤔 your 3.2 million ain’t coming out at the 12% bracket. Your social security is going to be half of the 12% bracket by itself. Don’t forget your year 1 RMD on 3.2 mil is over 130k. That alone just put you into the 24% bracket. Also have fun paying increased Medicare premiums. Heaven help you if you have any other sources of taxable income.
@@DeepFriedLiver That's really beside the point as DR is foolishly or incompetently making a bogus comparison. His premise is flawed so any conclusions are worthless.
@alrocky so he clearly shows your example makes no sense but that's "beside the point"😂
It's going to be so much easier not paying taxes on what you pull out of Roth. With a Roth, the amount you see is what you have. With a traditional IRA, a percentage of what you see as your balance is going to be taxes.
Sure it's easier but not like it's super hard to check your statement and calculate how much of it is going to taxes. I'd still rather optimize and make the decision of whether to do Roth or Traditional based on what gives the greatest return.
I see what you are saying but ease of visual calculation should not be a deciding factor.
Roth==what you see is what you get. You KNOW EXACTLY how much you have.
This analysis missed the point that the Roth contributions are taxed at your marginal tax rate, the your aggregate 401k balance will be taxed at your effective rate (which likely will be lower). Smart plan is to have finds in both.
I think the right decision is to contribute to both roth and traditional personally because you cannot predict future taxes and you get the benefit today of the traditional. Of course I'm not a licensed financial professional, so take this opinion how you will.
This is my fifth year after retirement. I’ve been following the 4% rule thing, but this isn’t really how hard I expected things to be. I still have about $460k outside funds in my IRA to invest in stocks. Pls how do I take advantage of the market turnaround?
Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.
A lot of folks downplay the role of advisors until being burnt by their own emotions. I needed a good boost to help my business stay afloat, hence I researched for license advisors and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. $850k so far.
I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
There are a lot of independent advisors you might look into. But i work with Nicole Desiree Simon and she is excellent. You could proceed with her if she satisfies your discretion. I endorse her
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
So that bit at the end about people not adjusting for taxes roth vs traditional doesnt make sense to me, because, at least the way my plan is set up, it takes a percentage of total pay and contributes that to the 401k of choice, so a 100 dollar contribution would end up only being somthing like 75 in the roth. Unless you bump up the percentage until you get a dollar amount you're happy with, i dont see how it's tricking you into putting more away for retirement.
I understand this lady what she meant. If we are in higher income bracket, you can save 22% or more in tax if you put everything in traditional. But once you retired you just get enough money to live on and convert some of it from traditional to Roth IRA to stay in 10-12% marginal tax. A little bit of work but mathematically you save more in a long run.
You still owe the taxes moving money from traditional to Roth.
@@michaelrasmussen8624 no duh that what the person is talking about. You can decide how much to convert to stay within those tax brackets. You will always pay taxes on that money either way roth or traditional.
Everybody does understand that the higher tax rate is only paid on the income above that threshold, right? A fraction of the total income.
Someone very wise once said...the problem is not that you're ignorant; it's just that you know so much that isn't so.
@@jcj6892 I'll tell you how. You just add what you save back into your contributions, like Dave claims no one does (I do). That way you pay a 10-12% tax on money that's that much higher anyway, unless you plan it out to take smaller distributions and be taxed at a much lower rate.
Roth is for people who can't plan their retirement, traditional is for people who can take advantage of the tax deferrals now and minimize taxability later.
@@jcj6892 easy because all you have to do is invest the tax savings instead of spending it. Dave tell people to do Roth because he knows a majority of people are too dumb to do the math and actually know how it works. Here is an example, I live in California and my marginal tax rate is 44.3% so if we take the 401k and i do $22.5k I save almost $10k in taxes that I can then invest more than I would if I went Roth assuming the same investment with Dave's return numbers of 12% over 40 years comes out to be ~$7.6 mil on top of the $15.6 mil in the 401k account. So if i went Roth I'd have $15.6 mil tax free but going traditional I have in total $23.2 mil which if we take into account the 12-15% tax rate if we do conversions to stay in that bracket I would have an extra $7.6 million. Also if you live in an income tax state and move to a state with no income tax or where they don't count retirement income in your income taxes you essentially never pay that state tax.
Plus that its tax free for your heirs, so crucial.
Investing in a Roth IRA is a great option because it's funded with after-tax dollars, allowing your contributions to grow tax-free over time. When you retire and start taking money out, you won’t owe taxes on your withdrawals, helping you hold onto more of your savings. I personally retired with $5 million.
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Your advisor must be really good. How I can get in touch? My retirement portfolio's decline is a concern, and I could use some guidance.
Finding financial advisors like Rebecca Nassar Dunne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Wealth is built in both bull or bear market and also wealth transfers from the impatient to the patient. One of the best ways to succeed in crypto is by trading your assets with a good strategy,...,
I want to compliment you, you have said it all. I am a little business owner and I really want to expand my business to the next level by making myself an investor but I really don't know how to go about it..
imagine investing in Btcoin earlier.... You could have been a multi millionaire precently
@@eileengardner5462 You are right. Been thinking of going into gold and cyptocurrency
Assets that can make you rich
*FX
*Btcoin
*Stocks
*Gold
*Real estate
I’m new to cypto trading, feels overwhelming but I won’t give up on learning this. Thanks for your clear explanation from the very beginning!
Dave is wrong, RMD now starts at age 73 1/2 not 70 1/2. Not that it makes much of a difference. Your investments in the traditional IRA keeps growing in value.
73, not 73.5
So you take RMD's starting at age 73 with more money because of the 3 extra years of growth. Your RMD will increase each thus adding more taxable income. If you are not careful RMD's can add alot of taxable income. Just something to be very aware of in retirement. A roth IRA has no RMD's and is tax free. A roth 401k has RMD's but you can contribute more than a roth IRA.
With how much our government is spending, our income taxes will definatelly be higher when we retire.
But yours will be zero, zero income = zero taxes.
What is not considered is taxes will only go up.
@@stevenporter863 Exactly what will be your income the day after you retire? 1M? 2M? try zero. You can withdraw all of it and create a huge tax bill for yourself.
bidenomics baby
So many people withdraw money from Roth more than 4% per year because it is tax free. If they had Traditional IRA, they would withdraw less. Why Dave never mentioned 4% rule?
Ramsey is WRONG. He was onto something with the fact that to put $100 in Roth, you must commit $130 of your pre-tax income (depending on your tax rate). However, to put $100 into your Traditional, you only need $100.
Now, let's compare apples to apples. Assume you have $100 of your PRE-tax income to invest. Also, assume we want to put an equal amount in Traditional and Roth to make it easier to compare. To put $70 into Roth, you'll spend $30 on taxes. With Traditional, you put $70 in and still have $30 pre-tax left. Let's cast it and tax it: $30 before tax turns into $21 cash post-tax. You can invest the $21 as well.
Thus, with Traditional, you have $70 invested pre-tax and $21 invested post-tax (the profit on it will be taxed again in the future at a lower tax rate due to long-term holding). With Roth, you only have $70 invested.
Now, take into account the miracle of compounding. Because of long-term compounding, it is MUCH better to invest more money now than later. If you run the numbers, you'll see that in most cases, Traditional beats Roth long-term, EVEN given the fact that you'd need to pay additional tax on profit from your post-tax $21 investment down the line and even if your tax rate in retirement is high (40%). Traditional beats Roth from the sheer compounding over time from your pre-tax and post-tax investments.
The big question is, will the tax rise over time, and how much it’s gonna during retirement? The trend so far is that the tax is going up. However, it is also very likely that governments and states will compete for people just like businesses and offer better conditions in the future. However, predicting 30 years in the future is hard. Don’t trust anyone on this.
Should you actually account for the taxes, ($130 in traditional vs. $100 in ROTH) do you end up with the same spendable amount?
You put the same amount in. If you put it in a Traditional account, at the end of the year, your taxable income is lower. If you put it in a Roth account, your taxable income is not lower and depending on your income and deductions, you may have a slightly higher tax bill.
Years later in retirement, all your withdrawals from your Traditional account must be figured into your taxes, and at age 73, you are required to take a certain amount out (required minimum distributions)
Nothing in your Roth account is taxable in retirement and there are no RMDs. If you pass it on to your heirs, they have 10 years to sell/transfer out of the Roth account.
Hey Ramsey show, you better take care of those scammers in the comments, otherwise people will blame you for bad things. And not all of them are smart as you know, to stay away.
A traditional has the benefit of compounding interest on the portion that will be taxed later on. Also employer matches.
I contribute to both roth and traditional
Roth will be used for large purchases when i retire and my traditional will take care of living expenses and whatever else
What if you are in the highest income bracket while working?
ROTH.
and say you work in a state with income tax, like CA, but you retire in a state without like FL.
If you’re over the income limit for a Roth IRA (153k single & 228k married) then you can only contribute to a Traditional IRA. Roth 401k anyone can contribute to.
If you are too high of a tax bracket for a Roth IRA because of the income limits. You can contribute to traditional and then convert the assets to Roth. It's what's called a backdoor conversion and is completely legal. Ask your investment firm about it and they can help you set it up !
Thanks for your input. Just one more question, I have already paid taxes on half of my retirement. It's not in a Roth or IRA? Unfortunately I never thought about opening a Roth until last year.
I will be 65 in January and will retire along with the wife 4 months later in June. I have a work 401K and plan to roll it over to a Roth IRA when I retire. I also have another retirement savings I plan to roll that over too. But I’ve recently come across one of my stocks that’s tripled and plan to sell it all except for 100 shares. Should I take that and open my Roth IRA? That way I’ll have it already set up for transferring my retirement accounts to Roth IRA.
I put every extra nickel into traditional instead of after tax money into roth so probably ended up with an extra $200,000. I won't pay that much total taxes until mid to late 80s. Family history has me gone by then.
What’s your advice for those who don’t qualify for a ROTH but don’t make enough to be an accredited investor?
Why do you think that you don't qualify for Roth IRA?
everyone qualifies for a Roth IRA. Either the regular way or through a backdoor roth ira.
Dave is right and wrong at the same time, it all depends on your income at old age. if your expecting to be a high earner at retirement with a lot of passive income (business owners, real-estate/property owners, investments) then ROTH IRA during your working years is the best path. If your someone with a regular 9-5 and dont expect to have high residual income during retirement (meaning your total income during retirement is less then 100k) then Traditional is your best bet because your going to get taxed at your margin income bracket during retirement. $22,001 to $89,450 = 12% of amount over $22,000. Please remember that Dave's Advise is predicated on the fact that he expects you to be a high Income earner at retirement.
You mean automated income. There is no such thing as passive income.
Not really.
Here's an example:
A person put in 22,500/year for 30 years (monthly contribution). With an interest rate of 9%. That comes out to be 3,432,644. Of that total amount, 675,000 is the contribution.
Assuming his/her effective tax rate is 30% currently (that's the effective tax bracket for someone with an income of 900,000). The total tax per year for that contribution (if the contribution is going into a Roth) is 675,000 / 30 *0.3 = 6,750 per year (or 22,500 * 0.3 = 6,750).
Minimum distribution from the 3,432,644 401k account is 126,200 per year @72yo. At that income, the effective tax rate is 15% or 18,930 per year >> 6,750.
It's wiser to pay the 6,750 tax right now to prevent a 18,930 tax bill at retirement.
Also note I only use 30 years (as if someone started 401k contribution late in the game). The more time, the larger the gap.
Now if the market rate is
I agree. If you make less than 100k in retirement (and especially if you make less than 60k), traditional IRA will almost always be better for the reasons you said.
Dave gives rather poor advice when he talks about the two options. He never accounts for the money that you saved UP FRONT when doing a traditional contribution. That money doesn't just disappear into thin air. You can actually INVEST those dollars that are now sitting in a taxable account. So your Traditional IRA/401k is your Traditional Balance + the "outside" money you saved and invested. Compared with Roth which is just the Roth Balance and NO outside money. The comparison has to be COMPLETE to make sure you know which is best for your situation. They both have pros and cons, and you need to choose the one right for you. It isn't as simple as just "choose Roth".
The passive income from investments doesn't really makes sense if we're talking about stocks because those are counted as capital gains so if you hold them for over a year or are getting qualified dividends then these are not taxed as your ordinary income so that's really comparing apples and oranges.
I have a friend retiring, we both do very well financially. She said she was shocked that she qualified for ‘ObamaCare’ because her retirement accounts were Roth and do not count as annual income. Another perk to saving in Roth… for now (laws always change) you can actually retire in that 59.5 to 62 year old range and not have to worry about health insurance!
Roth=tax paid pre investment
Traditional = tax paid post investment
Pay tax sometime: at beginning when there is less (Roth) or withdrawing when there is growth (Traditional). Gains aren't taxed under Roth.
@@stevenporter863 You're not counting all the taxes you paid every month on the Roth contributions. You have to compare the two in that light in order to make it a fair comparison.
no way
I heard something and want to confirm this is true. For the 401k the 5% "Match" by the company is always TRADITIONAL is that true? Sounds like the best plan is to do your contribution as 100% ROTH (up to 5% it's matched with 5% Traditional) but anything above just goes into your Roth.
As of 2024, the employer match can be Roth.
I am at the beginning of my "investment journey", planning to put 85K into dividend stocks so that I will be making up to 30% per year in dividend returns. Any advice?
Investing without proper guidance can lead to mistakes and losses. I've learned this from my own experience.If you're new to investing or don't have much time, it's best to get advice from an expert.
Yes, I agree. I use a financial advisor too. Same person since 2020. I don't worry about whether the economy is going up or down or sideways. I always ride through.
@@DonaldStokes-p I really want to get in with a financial advisor this year, especially as all markets are hitting lows. I don't want to be too optimistic and end up losing everything.
Sharon Ann Meny is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Roth for sure is king in your early years of saving, because your probably not in a high enough tax bracket for the tax savings to matter and you have a long time for that money to grow. But if you are getting close to retirement a traditional might make more sense as your probably in your peak earning years and there isn't as much time for the money to grow before retirement. Where the transition is, is a tough call and depends on each individuals income and savings journey.
I've been maxing out my Roth every year since I was 27 and i'm 37 now. The ROI has been amazing
(I understand if you prefer not to answer) Curious, how much profit has it made? Asking for Educational Purposes.
Well the growth doesn't really matter on the account type but more what the investments are. Also over the past 10 years we had one of the longest bull runs in history so pretty much anyone investing in the market was making money.
That’s good that has happened for you. I plan to start investing in a Roth Next Year. Sounds like it’s definitely great long term
Nice. Hoping to have similar experience. ❤
The only part he is missing is this. To contribute 96000, you are taking taxed $96000. So you had to make more like 115,000 or 120,000 to contribute that 96000. So a 96000 Roth contribution is more like 115,000 Traditionl contritbuton. Either way you you took 115,000 of your salary and put it towards your retirement. Also the tax implications of having a higher taxable income when contributing to a Roth. This is why you do both though.
I love that in this video Dave is basically saying if you read between the lines "my audience is full of financially dumb people so I have to keep my advice super simple even if it's not optimal because they can't deal with the nuance of taxes" Roth is not always best but it depends an several different factors which most of the audience is not gonna understand or want to understand. If you want to give a very generic blanket statement that Roth is good sure but doesn't mean it's always better than traditional.
@@anthonymejia2481 it’s not that there are dumb people so without Dave Ramsey they’d be doing worse. The problem is Dave doesn’t teach people how to think about money just basically says don’t think or do the math and follow my system because everyone else is wrong. The dogmatic way people follow him as he basically is calling them dumb is what boggles my mind.
@@whasian2007 The reality is that Americans ARE objectively dumb, and they will do anything to avoid thinking.
I don't agree at all..the people who are NOT is audience and save nothing are the one who are dumb. (35% of the population). Get real dude.
@@whasian2007 So the whole Financial Peace University and Baby Steps don't matter, huh?
@@damondiehl5637 like they matter in what sense? Do FPU and the baby steps help people who know absolutely nothing about finance sure BUT it also gives them so many misconceptions and doesn't actually teach you about finance they just follow the cult of Ramsey. I wish people would actually learn about finance, apply it to their own personal situation and do what is best for them but Dave only gives huge blankets statements that don't apply to everyone.
At my work if my 401k has a roth option but matching goes to the traditional account….. should I go with the roth
The downsides of Roth is that there is an income limit for contributing to a Roth IRA, that your invested money is tied up until 59.5 years old, and that you can only put in $6,500 per year. Other than that, they are the best retirement account that exist
False. You can withdraw money from a Roth tax free every 5 years from when you deposited the $6000. You cannot withdraw the EARNINGS.
The traditional, it is tied up.
@@wewhoareabouttodiesaluteyo9303did you even read what the OP said? He said you can only contribute $6,500 per year which is 100% accurate.
@@FrankS111 You can contribute a lot to a traditional, BUT you're going to pay it almost all in taxes.
Say I put it $6k every year til 65 and assume I am...22. I have 43 years of $6000 AND I invest that in 10% growth stock mutual funds. I would have like A LOT. Traditional, you contribute what is it? Like $20k something? You invest it in 10% growth stock mutual funds. You are going to be paying a crap load in taxes (principal AND earnings are taxed). Roth you do not pay any tax on anything in retirement.
No we have roth 403b, and can contribute 22,500 a year, and can start to withdrawal at age 55 instead of 59 1/2 penalty free if I choose to retire then, which with my pension I can withdrawal that at 56 so it's possible.
You are confusing an IRA with a 401k/403b. The contribution limit for an IRA, Traditional or Roth, is $6500. The contribution limit for a 401k/403b, Traditional or Roth, is $22,500. You can have both an IRA and 401k/403b, and either of those can be either Roth or Traditional, unless you make more than the income limit for a Roth IRA of course. @@wewhoareabouttodiesaluteyo9303
Shouldn't you have some tradional to take advantage of the zero tax standard deduction in retirement?
Yes it's prudent and as you noticed quite evident to contribute to traditional 401(k). Favor contributing to traditional 401(k) when at relatively high tax bracket and favor Roth 401(k) when in low tax bracket. As default contribute $7,000 to Roth IRA and as much as you can to traditional 401(k).
One thing he didn’t address is compound interest/growth. If someone is contributing a certain percentage of their paycheck, where the amount is like his example $100 vs $130 contributed… let’s multiply that by 5: so $500 monthly in a Roth 401k vs $650 per month in a traditional 401k. Let’s start at age 20 and go to 65 with a 10% return. Traditional will net $6,870,306. Roth will net 5,284,928. So the traditional account will have an extra 1,585,378 sitting there to earn you even more compound growth/money. It’s not going to be removed in a lump sum either on your retirement date so I don’t understand why he faulted the woman’s advisor for traditional. He thinks being taxed later so you can use that money now for compound growth over several decades is bad??
Dave often says when doing yearly taxes, you don’t want a big refund because it means you’re loaning Uncle Sam money for free. Well getting taxed now is basically the same. Why not be taxed later and invest the money for a compounded 10% return over decades??
Traditional will have more value, however after taxes it's reduced.
@@MeltingRubberZ28 in my example, traditional will have 1.58 million dollars more than Roth. How many months will it take for you to withdraw 1.58M worth of your account to the point of traditional and Roth being equal?
Meanwhile that extra 1.58 million will continue compounding more than paying for any tax difference. As I said, you’re not taking the whole amount out in one lump sum. You’re taking it out a little at a time: monthly, quarterly or yearly.
However forget that it will continue compounding. Forget that you’re not going to remove the entire a lump sum with one check. Let’s make it worst case scenario. Write off 25% of that extra 1.58m, so 395,000 goes to taxes. You’re still left with 1.18 million more than the Roth. 15 percent pre-tax (traditional) is a lot more money contributed and more a lot more compounding than 15 percent after tax (Roth).
@mrcove1 i would have to do the math on your example as they typically break even, however there are a lot more rules with a traditional retirement account (RMDs, historically taxes always increase, etc)
1. People don't behave that way. You don't invest one amount because it goes into a Traditional account and a different amount because it is a Roth. You decide to invest XX% and then decide which type of account to use.
2. The tax later is on both what you contribute AND what it grows to. With a Roth account, all the growth is tax free.
@@damondiehl5637 1. 15% of gross pay (pre-tax, aka traditional) is more money invested than 15% of net pay (Roth). People have to invest in one or the other, so I’m not sure what you’re referring to by saying people don’t invest that way. Yes, they chose 15%. Choosing traditional means more money gets invested. Those additional investments gets compounded over decades. 2. The tax later on traditional is only taken from your withdrawals. Again, you’re going to have so much more money in the traditional account than you would with Roth (1.58 million more), that it will take decades for the account balance get down to the amount of the Roth (if it ever gets to that point). So you can withdraw more, have the tax taken out of that, and still be way ahead of the Roth.
There are a lot of considerations when making these types of investment decisions. Sounds as though this caller has availed herself the services of a financial advisor who seems to be making the right moves. Dave also engages in a bit of disingenuous trickery by using two different contribution rates in his comparison of Roth vs Pretax.
Yes, the general rule of thumb is Match > Roth > Pretax. However, Roth vs Pretax is heavily dependent on where you are in the retirement savings lifecycle. A young person who is early in their career and most likely at a lower tax rate would probably be better served by utilizing Roth. A later career employee who is at a higher tax rate may be better served by using Pretax - especially if they anticipate being in a lower tax rate when they are withdrawing their retirement funds. Just have to do the math, as they say.
It requires good experience and knowledge to carry out a good and successful trade, I have lost a lot trying to trade all by myself...
The part that I’m confused on is the maximum income requirements , I’m 25 now making 150k a year and will be clearing 200-300k by 30 , I plan on owning 3 properties one being a multi unit rental to cash flow by the time I retire, I’d love to retire at 55 but I’m not sure if Roth is right for me , I also have a company retirement that is very competitive
GREAT Topic. ☘️☘️☘️
Is there an income limit to fund a Roth? I’d like to max it out each year, but the searching I did seems that my income was too high to fund one. Any answers?
for a Roth IRA yes as of 2023 the max income is $153k if you're single and $228k if married filing joint. There is also a partial limit if your income is between 138k-153k for single and $218k and $228k if married. You can always do a backdoor roth while those are still allowed which basically is contribute to a traditional IRA then transfer it to a roth IRA. For a Roth 401k there is no income limit. Hope this helps.
@@whasian2007 it does help. My issue is that I made 197k last year, great income I know, but does prevent me from placing into a Roth. Unless I can do it early in the year before my income surpasses the limit. 401k is something I didn’t start taking serious until last year, but I do know the limit on that is about 22k/yr. I just want to know where I can put my money to grow the best way possible.
@@brandonwaller4328 just as an FYI it doesn't matter when you make the contribution during the year all that matters is the year you contribute and the amount you made that year. Some people have to sometimes take it out cuz they make more than expect and pass the limit. I would say the best places for growing money for retirement is either IRA or 401K then anything about the limits for those just use a normal brokerage account. Whether you should do traditional or roth depends on a lot of factors like income, location, goals ect.
@@brandonwaller4328 Are you familiar with *_back door_* Roth IRA?