Investing in a Roth IRA can be a wise decision since it is funded with after-tax dollars, allowing your contributions to grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won't have to pay taxes on it, helping you retain more of your hard-earned money. I 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.
Seeking guidance from a consultant or investing coach is advisable if you're unfamiliar with market dynamics. Personally, consulting with an expert has been instrumental in navigating the market and achieving a portfolio growth of approximately 65% since January. While it may seem like a common suggestion, I firmly believe it's the most practical approach for entering the business successfully right now.
It is advisable to save at least 15% of your income in a 401(k). Online calculators can help you estimate the appropriate savings amount based on your age and income. By saving at least 15% of your income in a 401(k), you can work towards a comfortable retirement. This strategy allows you to benefit from compound interest, potentially growing your retirement savings significantly over time.
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
I work with Rebecca Nassar Dunne as my fiduciary advisor. Simply look up the name. You would discover the information you needed to schedule an appointment.
Thanks for sharing. I searched for her full name, found her website immediately, reviewed her credentials, and did my due diligence before reaching out to her.
A lot of people are not financially stable this period and it's not easy, I always advise people, don't just waste your stimulus checks or salary, invest it in something that will yield more, even if it is a part of it. We can't keep relying on a paycheck that is already half-spent before we even receive it, there are investment opportunities that have helped a lot of people especially in the financial market. Having different streams of income is essential in this pandemic, especially now most of us have to earn and work from home. I've made impressive progress so far this year and it has helped me sort out a lot of bills and I do that through a registered investment company. You can get in touch with the manager via Instagram (@nicholas__fxtrad)e he will guide you properly
Han Xia They should be teaching how this 401 k is a scam. No such thing as free money. You have to be pretty gullible to believe that these ppl care about you.
A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can take advantage of compound interest and potentially grow your retirement savings to about $3M over time?
@AlexanderWebber Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for a while now mostly and I made over $800K within a short time
@harrietlancaster44 The thing is that I really don't like making such recommendations. But there are many freelance wealth managers you could check out. I have been working with *Robin Nicole Brezik* for about three years now, and she's made decent returns. If she meets your discretion, then you could go ahead.
Agree but you can't put as much as 401K (the government is really killing the poor here)...individual 5500/6000(2019) max and for spouse another 5500/6000
Saurav Gupta I think he is talking about Roth 401k, where limit is same as traditional 401k (both of them combined have limit of $19000). But yeah, if Roth 401k is not offered at work place, then you are stuck with Roth IRA where limit is $6000
Saurav Gupta big software companies do. I work for Salesforce. They not only offer Roth 401k, they even offer in-service rollover. So I can contribute as much as $30,000 per year in “after tax” and immediately roll it over to Roth 401k. Theoretically, I can hit that $55,000 401k limit and have everything (except $5,000 of my employer match) else in my Roth 401k
@@kshitiz06 Good for you :-)...I worked for GE, Metlife, Citi and JP Morgan and I was not offered one...I guess you are luckier than most tax paying people...I think the majority of the working force paying taxes don't get a 401K...again I could be wrong...
that's the only complaint I have about working at my company... they do not match 401k contributions.... other than that it's a great place to work (stress free, work at your own pace with practically no supervisor, work 9 hour days and get every other Friday off, paid holidays, 150 hours vacation per year, vacation time not used gets transferred to sick leave the next calender year, and health insurance is covered 100% by the company)..... some of my buddies that work at other firms try to get me to leave and work with them because they pay better, but they're sent out of town every week and have to stay in a hotel only coming home on weekends, and they work 6 days a week pulling 60 hour work weeks.... not worth it to me!
Yep you need to stay there.I think my work is the polar opposite of your work.They match 401k to a point but high stress and pressure cooker environment.
401k account is offered by an employer. Sometimes the employer will match some of your contribution (free money for you!) IRA is your own retirement account (Individual Retirement Account) Both types of accounts are offered in Traditional, or Roth With a Traditional account, you get to deduct your contributions each year at tax time, so you pay less in taxes, but you have to pay taxes on the money when you take it out. (you are investing with pre-tax dollars) With a Roth account, you cannot deduct your contributions at tax time, but you don't pay taxes on the money when you take it out. (you are investing with post-tax dollars) Contribution limits to a 401k for 2020 is $19000 (plus your employer match). Contribution limits for an IRA for 2020 is $6000. (If you are over 50, you can contribute a little more) If you elect to have a Roth 401k, your contributions will go into the Roth, but your employer match will go into a Traditional 401k.
Yes to an extent, which Dave mentions. You can put for example 10% of salary to traditional 401k, or 10% Roth IRA; your employer match’s Money will go towards before tax. You can do 50/50% on traditional and Roth IRA, and the employer match will still go to before tax.
Your contributions to a 401k can be either NON-QUALIFIED (Roth) and QUALIFIED. 401ks in this case are the best option because there is the matching feature and your contribution limit is far greater than a regular IRA. 18,500 is the maximum amount of money an individual can contribute in a employer sponsored plan, and 5,500 is the most you can to a IRA. With exception of the catch up for people over 60 that can contribute an additional 6000. HOWEVER some companies starting September 1st will be matching the ROTH plans (401ks)
Why i advise you do your tradings outside your company. You don't have to let them know! That is what i did, and here is my strategy i don't hold a lot of Juniors just Majors i prefer trading the juniors through a Pro only because being very much more profitable it is riskier too.
If I understand this correctly, I will explain what he is stating reference the “Company Match” for Roth 401k. Let’s say you put in 4% of your paycheck into a Roth 401k every two weeks. Your contributions will go into that account. Now, if your company matches you, let’s say 3%, then that money they are contributing will be placed into your Pre-tax 401k traditional plan and not into your Roth 401k. In conclusion, you can contribute to your Roth 401k plan and your company will still match you the 3%. However, they will place there contributions into the 401k traditional plan.
you should always do some in a traditional because you save your marginal tax rate when it goes in and when you start to pull it out, you can pull out some tax free (exemptions/deductions) and then you pull out some at the lowest tax bracket of 10%, then 15%. So always, always put some into the traditional. It is stupid to pay money at your highest marginal tax rate that you can withdraw at a zero to low tax rate. Make sense? Help me if I am wrong.
The way I look at it is this, if you look at tax brackets over the decades it jumps up and down over time. We KNOW what we're paying now, which is a relative historic low (rates just dropped as well, along with doubled standard deduction). We also know that the majority of american households are pulling around 50-60k, and the bottom tax bracket is the first 10k at 10%, the second at 12%. Even in retirement the average household, assuming married, will likely never break out beyond the second tax bracket and won't go below the first. Finally, the quality of the average 401k varies significantly. Some companies offer ones with very high expense ratios and many offer limited selection on what is available to invest in. On top of this many require several years to be 'vested' and actually get a company match, if one is offered at all, and on top of this many companies only match with company stock. Combining these things, you have families who are likely to end up in retirement in the same bracket at best but charged a higher rate, along with a plan that takes a bigger cut of your earnings, leaving you with less to draw from and what is drawn is done at a potentially income tax. Because of these things, married people will likely need to be making at least 100k before there is a clear benefit for traditional 401k, with even taxable accounts looking better for low tax brackets.
Turns out having a mildly-frustrated dad-like figure talk down to me like I'm slow is actually my preferred method for absorbing financial information. Who knew?
An important factor when considering the Roth and the traditional IRA depends on tax law and the National Deficit. We now know tax law isn’t static... there can be sweeping changes enacted in a minute. There was serious discussion about eliminating the tax benefit of traditional IRAs with the TJCA. This was shot down, instead double taxation was instituted. The next question will be when SS and Med are depleted and or recession comes - How will the government fund itself? During the Great Recession there was talk about taxing retirement savings. Let me say that again. There was talk about taxing investments in retirement plans whether or not they were distributed. So the best advice I received regarding 401ks and IRAs is lower your taxes as best you can today as laws ma change.
A lot of different ideas are floated by a lot of different people and most of them are never implemented, but your point is taken. I think there's a saying about a bird in the hand...
Most of the talk I've read is about taxing Social Security and pensions along with capping allowed contribution limits to 401ks. They're a long way off from being able to do anything to actual retirement accounts.
The only reason to take a traditional 401k is if you’re are making insane amounts of money now. Take the hit now with lower taxes and take tax free growth.
I came here to learn how to invest after listening to a guy on radio talk about the importance of investing and how he made $520,000 in 3 month from $150k, somehow this video has helped clarify some things, but I still am confused, I'm a newbie and I'm open to ideas on how to invest for retirement.
As a 1st generation investor and considering the fact that beginners are prone to mistakes I reached out to a consultant for help, as far as my journey goes, investing is much easier when you have proper guidance, since January till now, I have made at least $200,000 in profit, not much compared to the investor you mentioned but its a good start for me
@@feliciasherbert989 200 grand is not much? I would literally kill to have that amount right now in my bank account, just kidding, congrats on your success
@@feliciasherbert989 Please do you mind leaving me your consultant’s contact info? or preferably I can also leave you my email if that suits you better
Her employer, if she is an employee, is the one who has to offer a 401K to his employees. The employer is not obligated to do so. If your girlfriend is an independent contractor I don't believe she is eligible for a 401K. In that case she should contribute to a traditional or a Roth IRA.
I asked this question to my investor and he said "your tax rate will be MUCH lower when you retire because your income will be based on SS and any draw from the 401." I make about 300k or more a year currently so high tax rate. Net worth of over 3m pretty evenly split between cash, properties and 401k. But now that I listen to Dave a lot more I'm wondering if that was bad advice. Pay a HIGH tax rate now or a LOW tax rate when you draw (roth vs 401k) makes sense. I'd like to know if there is a calculator that can figure that out (of course we don't know what the lowest tax rate will be in 20 years when I retire, but we can guess). BTW, I'm DEBT FREE including the house! Have been for years thanks to Dave and Bruce Williams! :)
@J. Smart Probably. But even if I withdraw 100k a year it's still a lot lower taxes than I pay now. I've got plenty of cash and by retirement Ill have a lot more.
You pay no taxes on money coming out of a Roth. You get to deduct your contributions to a traditional account each year at tax time, so that lowers your taxable income. How important to you is paying no taxes on distributions in retirement?
@@mumenrider862 All this represents is a buying opportunity, another chance to get in at lower prices. By this time next year you will be patting yourself on the back for jumping in.
43 and debt free for 2 years. maxed out Roth IRA last 3 years. $40,000 to $45,000/year job which I contribute 15% to 401. Company match sucks. Very physical job. Do I take $30 to $35,000 job that is easier on body with 100% match? $50,000 left on home and always live within my means. Any advice is appreciated.
look up a youtube guy named Adam Tayofa. He is a family friend. He knows his stuff. He just recently started putting out videos (so not many views)...but he would be happy to talk to you
Look for mutual funds with a 12% average return over the lifetime of the fund (over 10 years) and funds with low expense ratios. I recommend Vanguard mutual funds.
A lot depends on your situation and plans in retirement. Dave's recommendation for Roth may be correct for most people, but his reasoning is extremely flawed. "But it grows completely tax free, which is the larger amount [the growth] that'll be in your account." That ignores the commutative property of multiplication. Let's say, for example, I budget $10,000 a year in contributions. For the sake of simplicity, let's say that my tax bracket is 22%. If I go with a Roth 401k and stick to my contribution budget, I've paid $2200 in taxes on that $10,000, leaving me with $7800 to invest. Let's say the investment triples. That leaves me with $23,400 that I've already paid taxes on and can withdraw tax-free in retirement. Now let's use the same numbers for a traditional 401k. 22% tax bracket, $10,000 in, and the investment grows 3x. At contribution, I don't pay taxes, so the full $10,000 goes in. The $10,000 grows to $30,000. My tax bracket is the same, 22% -- since I haven't paid taxes, I owe $6600 on the $30000 I take out, leaving me with $23,400 in retirement. In other words, as you might remember from math class: A * B = B * A. So, Roth doesn't always make sense without determining circumstance. Let's say you live in Wisconsin (a state with state income tax) and plan on retiring to Florida (a state without state income tax). If that's your plan, investing in a Roth has the potential to be a pretty bad mistake. You're paying the state of Wisconsin today about 6% of your Roth contribution, but if you were investing in a traditional 401k instead, you'd be saving that 6%, and when you moved to Florida in retirement, you wouldn't owe state income tax (as they don't have any). The same is true in reverse. If you lived in Florida now, and planned on moving to Wisconsin in retirement, it might make more sense to pay your state income taxes now (0%) to avoid them in retirement (6%). When does a Roth become more advantageous? When you know you're in a lower tax bracket than you'll be in retirement, or, when you're maxing out your contributions. If you're putting 19,000 into a 401k, you can actually invest "more" by doing a Roth, as effectively (assuming the 22% tax bracket again), you are investing 23,180.
Ok so if I understand this correctly, the AFTER TAX dollars put in as a contribution gets taxed?? It's like a double tax. The contribution is made up of dollars from someone's NET pay. It's a portion of the leftover funds that had been already taxed. So why the tax on the contribution?? Can someone please help me understand.
Use the calculator at AARP webpage, in my case I actually have more money after taxes if I continue to invest in the traditional 401k. What is usually the case is if you don’t want your take home pay effected, then you naturally contribute more to the traditional before tax. So more pay is being invested over the years to grow. Then when you take it out, your normally will be in a smaller income bracket. With these two facts you should come out ahead with contributions to the traditional 401K.
@@kckuc310 How much money are you making? Married people need to be making AT LEAST 100k before traditional makes sense, unless I suppose you plan on living on less than 10k per year. The standard deduction makes it so you need to be making a lot of money to be outside the second tax bracket, and considering we are at a historic low for income tax it only makes sense to go Roth.
401K Is not a good investment, the returns are barely substantial for an average investor, however I came by an investor who grew a profit of $608,000 in 2months from stocks and I'd really appreciate tips and ideas on how to make this much profit.
Without having prior investing knowledge, one can still make a substantial 6figure profit through the guidance of either a professional broker or tutor, I got in touch with a broker in April and through her guidance i generated a profit of $350,000 with no prior investing experience of my own, just basically taking advice from my broker.
@@gilispolls3572 Melanie Bailey Hess is my broker, I found her on a business insider magazine so i decided to check her out online and reach her, you can get in touch with her from her website if you care to get in touch with her, just look her name up online.
I am doing both, Traditional at 5% and Roth at 5%, Company is matching me on the Traditional 401K at 5% Match. I wish I knew more of what to do, but our salary is around $110K. I am on a plan to contribute 1.5% more to each until I reach 15% by age 40. We are using Fidelity, and so far have seen 14.3% growth.
Yup, I'm learning that. Most all people will have lower income in retirement. So the rate of tax will be lower. These folks may be fooling themselves a little bit.🇺🇸🤓
He's still advocating "growth, growth and income, aggressive growth." No mention of the danger of high expense ratios, fees, LOADs and neglects to suggest broad based stock and bond index funds. Doubt he understands the importance of asset allocation(A.A.) and that he failed to recommend an appropriate A.A. to the caller.
I always wonder why does he only promote investing in stocks, it seems like bonds are not worth it, what do you think how much percentage should be place on bonds for retirement.?
Yes a 401(k) is worth is especially if it offers good investment options at low fees. If so you have $19,000 of available tax advantaged space with which to invest. As a rule you should set aside at least 10% of income toward retirement. $6,000 to a Roth IRA and as much as you can toward your 401(k) is a good basic plan. . The rationale given in the first reply is rather iffy.
A Roth IRA is different than a Roth 401K. Because the IRA has a limit but a 401K does not? Also you can transfer as much as you want to a Roth IRA? I thought the limit in 2024 was $8,000.00 over 51 years old. So when can you do more? I watched some of these and Dave was saying to move things into a Roth with large amounts of 100K etc. How does that not have a limit?
My wife has a 401k from a previous employer (about 3k) we were thinking now is a good time to rollover to Roth IRA. Is this a good idea? Any advice helps, thanks much.
I have done the math on both if you take the tax saving from your traditional 401k (that is the critical difference) and invest it you end up with the exact same return after taxes IF your tax rate is the same. So with Roth accounts you are basically paying a know tax rate now so you don't have to pay an unknown tax rate in the future. So if you think your taxes will be higher when you retire as in % wise (which you really have no idea what it will be because you really don't know what congress will due unless you are retiring soon) put as much as you can in a Roth because you will get a higher rate of return after taxes. If you think your tax rate will be lower put it in a traditional account and invest the tax savings because you will get a higher rate of return because you have invested more upfront. If you have a mix of Roth accounts and traditional 401k/IRA's then have all your high risk high reward investments in your Roth accounts, and your more safe lower returns in your traditional accounts which you will be taxes on the returns. You will owe less taxes that way.
Correct. It is better to do Traditional since you'll likely be in a lower tax bracket in retirement, and if not then somehow you're making good money and shouldn't need the money from your 401k anyways.
2 important factors to also consider is that in a roth, after 5 years of opening the account, you can withdraw from the principal (money you have added, not the growth) penalty free. Also, with a traditional account, you will be forced to make regular withdrawals at 70.5 years old until death. You don't have any forced withdrawals with a roth. The roth basically has a little more freedom that comes with it because of those 2 things which is why I prefer it over the traditional.
If you're married your tax bracket WILL be higher at some point in the future. Why? Loss of a standard deduction and corresponding increase in tax brackets...and, yes, AND, more Social Security subject to tax...and, yes, AND, potentially MUCH higher Medicare Part B and D premiums. Never mind whatever your state takes. Never mind if you leave the IRA to your kids and they take lump sum distributions.
Use the calculator at AARP webpage, in my case I actually have more money after taxes if I continue to invest in the traditional 401k. What is usually the case is if you don’t want your take home pay effected, then you naturally contribute more to the traditional before tax. So more pay is being invested over the years to grow. Then when you take it out, your normally will be in a smaller income bracket. With these two facts you should come out ahead with contributions to the traditional 401K.
devon Hall i think it’s because even if you choose to do the roth 401k, the company will still match it (up to their agreed percentage), but their portion goes into a traditional 401k even though your portion is under the protection of a roth 401k
The people that I have my roth ira with do I just tell them I want my money spread 25% in each 4 category and they would find it for me or would I have to look them up or something?
Yes you may contribute 5% of your income to your 401(k) to get the the 5% company match and also open a Roth IRA. It's a good idea to do both. A better idea to invest as much as your income and budget allows.
@@nunyabidnes6010 I make about 400 a week, and I just opened a Roth ira but my bank says it’s just like a savings account and I can open it at any time with no penalty.. how can I do the compound interest part though?
You can put three times as much money in your 401k, each year ($23k vs $7k). But the funds offered might not be that great. (If they offer a fund that mimics the S&P500, that's a great option)
@@sikandersbustymoves9283 The assets you put in it have to grow or pay interest/dividends. Talk to your bank about how you add assets to your IRA. You can also open a brokerage account with a company like ETrade or Schwab or Fidelity or Vanguard. Then you can buy stocks, especially ones that pay dividends.
If a retirement fund is your money anyway why not just save it in a separate account, how much of a hit will you take per 10 year period with the lower interest rate?
He's completely wrong. The growth in the traditional and roth 401k's are tax free as well. You don't pay taxes on the growth of your account each year. You only get taxed on the amount you withdraw each year at retirement. So if your tax bracket is higher now then it will be in retirement then you are better off going traditional. if you think you will be in a higher tax bracket at retirement, then it's better to do the ROTH.
@@JohnDoe-fg9ng not sure what you mean. I don't see the contradiction. Say you make 100k now and are in a 25% tax bracket. That means your take home pay is $75k, if at retirement you are only pulling 80k from your traditional 401k account and your tax bracket is 20% you are only paying 16k in taxes. Therefore it is better to take the tax deduction up front (because you are getting a 25% benefit) rather than when you retire only IF you are sure that your income in retirement will be in a lower tax bracket then you are in currently. Even though I am a high income earner now, I still do the ROTH 401k because it does not have mandatory withdrawals and I can tax plan between pulling out the employer match portion (which is taxable) and my portion (which is tax free).
I'm 30. I have $33k in traditional 401k. Should I roll that into a roth 401k or should I keep it in a traditional 401k? I was told I should wait and see if taxes drop due to tax reform before I do that.
If you see yourself taking part of a year off of work that would be a good time to do it, since when you roll it you'll be hit with the taxes that year. Taxes have dropped and standard deduction has been doubled so now is as good a time as any.
Just got through visiting a finance person and they said when you roll your 401k into a Roth, you are taxed and it counts as income! Not happening Dave. I decided to rollover into a traditional IRA to take ALL my retirement savings and avoid being taxed. If you have a bunch of money and anticipate substantial growth in the future (and want to pay all the taxes on it out the door) go with rolling your 401k over into Roth. I literally went to the bank and hollered ROTH!!! Dave Ramsey said it! I want a Roth🙈 oh... the learning process.
Just to clarify, by rolling your traditional 401k to a traditional IRA you're not avoiding paying taxes, you're delaying paying those taxes until you withdraw from the traditional IRA.
As you stated, "the growth". What type of growth can you expect in a market that keeps on correcting? mutual funds do not give you any guarantees. The only difference between "checking a box" that says conservative, instead of high risk, is that your losses are smaller. Not even including the hidden fees of 401K's...
+Eduardo Ayala I've come to believe that the stock market is generally a sham. It's better than doing nothing, and the company match is good, but: future returns are only a prayer, you can't leverage or insure your money, fees can eat away at your bottom line...I'll stick with real estate and businesses...
I have a question. What if I start my IRA when I have a stable job & a few years later I quit & start a small successful business?? What will happen to my IRA ??
Nothing, other than it sits there, and hopefully grows in value. If you have earned income, you can keep contributing to it. If you are self employed, you can create a Solo IRA or SEP IRA and contribute a lot more each year than can be contributed to a standard IRA.
If your company matches 3%. You can invest 3% into your Roth 401k and they will match 3% also. But the 3% that they match will be traditional while your 3% will be Roth. This is what I understood.
Lots of companies offer a match, but not all of them. It is something to consider when you decide whether or not to take a job. My company offers a 3% match, but they pay it once per year, for the total past year. You have to be an employee on December 31st to rate that year's company match. My contributions go in each pay period. UPDATE: as of 2024, both your contribution and the employer match can go to the Roth account.
Ok got it. What if my company only has a 401k. But are planing to offer the roth401 in about 2 years or so. Should I open the 401 and then switch over when the 401roth is available or wait. And do the Roth IRA maxing my 15%. And when they offer the 401roth I can then lower the IRA by w e the job matches? ?? To balance the 15% .
You can convert a traditional account over to a Roth, but you have to pay taxes on that money as part of the conversion, as the traditional accounts are funded with pre-tax dollars. Start investing now. The more time you give your money to grow, regardless of which type of account it is in, the better. When your employer starts offering a Roth 401k, you can redirect your new contributions to the Roth 401k. The employer match will still go into a traditional account.
I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts totalling over $250k. I took a big hit in Q2, 2023. Right now i am just looking for ways to recover in 2024
There are a lot of strategies to make tongue-wetting profit especially in this down market, but such sophisticated trades can only be carried out by proper market experts;;
I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k 'after the 2020 crash. I however, invested the money using an analyst, and in seven months, I raked in almost $673,000
Sonya Lee Mitchell ’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment/
Great explanation. Totaly off the topic question. I hope you don't mind. What kind of headset are you using? The sound quality is very good and I'm in need of one with exceptional sound quality for my livelihood.
So if you do it through your job and it’s automatic, what does he mean by investing the same money into mutual funds? Like you can control where the 401k money is invested? I’m a little confused tbh
Confused because he said they don’t match with Roth401k only traditional then he later says to get the Roth401k at least up to your match. So which is it or what did I misunderstand?
Before 2024, your 401k contributions could go into a Roth account, but the employer match had to go into a Traditional. As of 2024, both contributions can be Roth.
Sure if you'd like to save money toward retirement and assuming the investment options are good and the fees are not high. You can also contribute to a Roth IRA.
Use the calculator at AARP webpage, in my case I actually have more money after taxes if I continue to invest in the traditional 401k. What is usually the case is if you don’t want your take home pay effected, then you naturally contribute more to the traditional before tax. So more pay is being invested over the years to grow. Then when you take it out, your normally will be in a smaller income bracket. With these two facts you should come out ahead with contributions to the traditional 401K.
Dave says the match is only in the Traditional but then he recommends to go for the Roth to get the match? He is mistaken. Also, mutual funds are dangerous. One should invest only in index funds (ETFs). Mutual funds have very high fees and are proven to underperform index funds in the long run.
+brco2003 I agree with what you are saying about index funds being better than mutual funds but you misunderstood what he was saying about the match. The match exists whether you do traditional or roth but he was saying that if you do roth then the match portion will still have to be taxed upon withdrawal because it wasn't taxed on the way in.
+James, D.R. likely mistakenly believes that the Roth is superior in all or most cases. He of course is wrong especially since he didn't ask the caller any specific questions about her tax bracket and other questions which would determine if Roth 401(k) or traditional 401(k) would be better for her.
100% agree. "Dangerous" when it comes to a method of investing? Hyperbole JUST A BIT. Also, as much as I like ETFs one can't make a statement that ETFs have "proven" to outperform mutual funds. There is no such proof. Simply look at the American Funds Investment Company of America. About as plain vanilla of a fund as one could possibly get. Yet...
I have a question, maybe someone can answer it. When you do baby steps and get to baby step 3 which I believe is taking 15% of your income for retirement. Is he talking about 401k and Roth IRA or is this a different savings we talking about.
I don't currently have anything in a IRA or 401k. I can put $3000 in an account today. I'm 35 and unsure which one to go after and what institution I should look into? I'm a veteran as well and don't know if I should check into USAA or Navyfederal.
@@alrocky no it's Union. I'll be vested around July of 2020. I'll be leaving shortly after I'm vested for school again. It'll bring me approximately $150 a month once I'm retired. That's all I currently have.
Yea I'm starting to think that those who blow there money and have all the toys are better off than me giving my money to wall street so I can see negative numbers :(
DAVE! Could you please do a video on target date funds! or if already have done so provide a link? Have heard good things about them and opened one but could you give some insight on them please.
A target date fund will invest your contributions into several of the other mutual funds or ETFs offered within the 401k. When you're younger, a larger portion of your contributions will go into aggressive/growth oriented funds. As you get older, the investment allocation will get progressively more conservative. It's good for people who want to take a hands-off approach to their retirement savings, since this reallocation from aggressive to conservative happens automatically.
I'm 23, my company offers a really good pension so I'm not too worried about the retirement part of it, but I would still like to invest a good portion into my own roth ira for retirment and also a good portion into an account that I can take out in 20-25 years when I'm about 45. What's the best non-retiremnt account I could invest that into and with my company already offering a pension, how much % should I be putting into my own roth ira and how much % into my 20-25 year non-retirment account?
Dave, I am looking into opening a roth ira. Through work they offer a 401k program which matches 6%, I put in 14% and all in a Roth. I was looking into a separate roth ira to put more away. Will they let me open a separate roth ira if i am already maxing out my roth 401k? I am 23.
Your job has no say on whether or not you can open a Roth IRA and they don't care if you do. The 401(k) contribution limit is is $18,000. Are you really maxing out your work 401(k) @ $18,000 at age 23? If so that means @ 14% you make ($18k / 14% =) $128.5k a year.
Between 1:40-2:13min I am hearing two different things. You said the company match would not be in the Roth, but only in the 401k, then you said you recommend we get the Roth up to the match. If there's no match for Roth, then what do you mean? I am confused. I currently have a regular 401k, and my company matches it up to 3percent. I am trying to figure out if it's more beneficial for me to get the Roth or not, but if the Roth doesn't match then, I'm just getting my own money back at the end of the day, right? Also, when is the earliest you can pull from this account and is there a charge before retirement?
Company match goes into one's traditional 401(k) account. Let's say you contribute $400 and receive a $400 company match: if you contribute $400 toward your traditional 401(k) you receive $400 company match into your traditional 401(k) account; if you contribute $400 toward your Roth 401(k) you receive $400 company match into your traditional 401(k) account.
An IRA and 401k are types of accounts, and mutual funds are a type of investment that goes into the account. Like having savings and checking account at the bank, they are treated differently. The government gives special treatment to retirement accounts to encourage people to save for retirement, thus the IRA and 401k accounts were born, on top of it these accounts also have Roth versions. Roth versions pay tax today so they don't have to in retirement, traditional ones pay no tax today, but pay it in retirement. High earners favor traditional, lower earners favors the roth.
My employer offers both a 401k plan and a IRA account that I can put into from my salary automatically. They match 50% of my contributions up to 10% of my salary. What do you recommend in this scenario.
Invest 15% of your gross into your retirement account and you will be well off in retirement. The employer match is above and beyond your contribution.
Sorry, but historically speaking, most people will have less taxable income in retirement and will therefore pay less tax overall. Plus, you'll be earning additional gains on that extra pre-tax investment money from the traditional. Roth does give the advantage of knowing that you won't be paying taxes in retirement (as long as the government doesn't change the rules), and if you know you'll have high earnings in retirement Roth is the way to go. BUT... for Dave to just make a blanket statement to get the Roth, without first considering other factors, is NOT good advice!
Historically, in the past that was true. Recently the tax brackets have changed along with the standard deduction. He should ask people what their marginal tax rate is.
Investing in a Roth IRA can be a wise decision since it is funded with after-tax dollars, allowing your contributions to grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won't have to pay taxes on it, helping you retain more of your hard-earned money. I 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.
Seeking guidance from a consultant or investing coach is advisable if you're unfamiliar with market dynamics. Personally, consulting with an expert has been instrumental in navigating the market and achieving a portfolio growth of approximately 65% since January. While it may seem like a common suggestion, I firmly believe it's the most practical approach for entering the business successfully right now.
Could you recommend your advisor? I'll be happy to use some help.
Sonya Lee Mitchell is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
I searched her up, and I have sent her an email. I hope she gets back to me soon. Thank you
It is advisable to save at least 15% of your income in a 401(k). Online calculators can help you estimate the appropriate savings amount based on your age and income. By saving at least 15% of your income in a 401(k), you can work towards a comfortable retirement. This strategy allows you to benefit from compound interest, potentially growing your retirement savings significantly over time.
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
Mind if I ask you to recommend this particular coach you using their service?
I work with Rebecca Nassar Dunne as my fiduciary advisor. Simply look up the name. You would discover the information you needed to schedule an appointment.
Thanks for sharing. I searched for her full name, found her website immediately, reviewed her credentials, and did my due diligence before reaching out to her.
I had 32 questions and this guy answered them in about 7 seconds... bravo
Great
@Wiliam Forsythe will u must be bored... me too😢
A lot of people are not financially stable this period and it's not easy, I always advise people, don't just waste your stimulus checks or salary, invest it in something that will yield more, even if it is a part of it. We can't keep relying on a paycheck that is already half-spent before we even receive it, there are investment opportunities that have helped a lot of people especially in the financial market. Having different streams of income is essential in this pandemic, especially now most of us have to earn and work from home. I've made impressive progress so far this year and it has helped me sort out a lot of bills and I do that through a registered investment company. You can get in touch with the manager via Instagram (@nicholas__fxtrad)e he will guide you properly
@Wiliam Forsythe You must be broke
Me too glory 😀
Things they should be teaching in school
This is what at teach at my High School!
whoops I
They teach financial peace at Brackett ISD.
Han Xia
They should be teaching how this 401 k is a scam. No such thing as free money. You have to be pretty gullible to believe that these ppl care about you.
No, in schools they teach how to develop a credit score instead of how making money
A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can take advantage of compound interest and potentially grow your retirement savings to about $3M over time?
@AlexanderWebber Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for a while now mostly and I made over $800K within a short time
@harrietlancaster44 The thing is that I really don't like making such recommendations. But there are many freelance wealth managers you could check out. I have been working with *Robin Nicole Brezik* for about three years now, and she's made decent returns. If she meets your discretion, then you could go ahead.
A great teacher can explain the most complex subjects in a few sentences. That's true experience and knowledge. Thanks Dave!!!
Tax rates will be higher in the future, so Roth is the way to go
Agree but you can't put as much as 401K (the government is really killing the poor here)...individual 5500/6000(2019) max and for spouse another 5500/6000
Saurav Gupta I think he is talking about Roth 401k, where limit is same as traditional 401k (both of them combined have limit of $19000).
But yeah, if Roth 401k is not offered at work place, then you are stuck with Roth IRA where limit is $6000
@@kshitiz06 I honestly didn't think about Roth 401K :-)...not a lot of companies (now) offer this option (I could be wrong)..
Saurav Gupta big software companies do. I work for Salesforce. They not only offer Roth 401k, they even offer in-service rollover. So I can contribute as much as $30,000 per year in “after tax” and immediately roll it over to Roth 401k.
Theoretically, I can hit that $55,000 401k limit and have everything (except $5,000 of my employer match) else in my Roth 401k
@@kshitiz06 Good for you :-)...I worked for GE, Metlife, Citi and JP Morgan and I was not offered one...I guess you are luckier than most tax paying people...I think the majority of the working force paying taxes don't get a 401K...again I could be wrong...
401k vs roth 401k?? Opinios please
Both are trash tying up money imagine the money in Realts or FX-Trading with it you are sure to make a very good passive income weekly.
Not a Pro. LoL. I work with "Sandra Yvonne Webster" in all honesty she is an Angel. Do your own research!
Sandra was here in Utah for a seminar. She spoke about Nft bubble Great speaker, full of humor and rhetorics too. Lol!
that's the only complaint I have about working at my company... they do not match 401k contributions.... other than that it's a great place to work (stress free, work at your own pace with practically no supervisor, work 9 hour days and get every other Friday off, paid holidays, 150 hours vacation per year, vacation time not used gets transferred to sick leave the next calender year, and health insurance is covered 100% by the company)..... some of my buddies that work at other firms try to get me to leave and work with them because they pay better, but they're sent out of town every week and have to stay in a hotel only coming home on weekends, and they work 6 days a week pulling 60 hour work weeks.... not worth it to me!
Yep you need to stay there.I think my work is the polar opposite of your work.They match 401k to a point but high stress and pressure cooker environment.
Ryan Cook what kind of work do u do? What sector?
Civil Engineer for a consulting company. We do a lot of survey and design phase planning.
Becky Shell put the pressure cooker on low heat
Brother where are you working? I need this in my life lol
You are beginning to make more and more sense to me. I wish i was taught this 25 years ago
F Gordon
All you had to do was read a book on this.
Roth options didn't exist 25 years ago
@@keemez yes the did
no, they didn't. they were championed in 1998. at the time I wrote that comment we weren't quite at 25 years yet.
"better than I deserve" great answer 🙏
You must be new here haha he always says that
@@CincoSnare76 I was just going to write that
When my company offered a roth 401k, I did a happy dance. 💃
Why does this subject confuse tf outta me😭
Tonia's Reviews same i still don’t get it 🤦🏻♂️
401k account is offered by an employer. Sometimes the employer will match some of your contribution (free money for you!)
IRA is your own retirement account (Individual Retirement Account)
Both types of accounts are offered in Traditional, or Roth
With a Traditional account, you get to deduct your contributions each year at tax time, so you pay less in taxes, but you have to pay taxes on the money when you take it out. (you are investing with pre-tax dollars)
With a Roth account, you cannot deduct your contributions at tax time, but you don't pay taxes on the money when you take it out. (you are investing with post-tax dollars)
Contribution limits to a 401k for 2020 is $19000 (plus your employer match). Contribution limits for an IRA for 2020 is $6000. (If you are over 50, you can contribute a little more)
If you elect to have a Roth 401k, your contributions will go into the Roth, but your employer match will go into a Traditional 401k.
Damon Diehl could I open a Roth IRA acc and put money in there, and also have a 401k through my employer
Cuz it's for dummies who Wana give there money up for 59 years
@@AlecDaStar yes you can.
I clarified this with my employer -- They match on both the traditional and the roth.
They match both what Dave was saying that the match for the Roth is before tax traditional rather than after tax.
Yes to an extent, which Dave mentions. You can put for example 10% of salary to traditional 401k, or 10% Roth IRA; your employer match’s Money will go towards before tax.
You can do 50/50% on traditional and Roth IRA, and the employer match will still go to before tax.
Your contributions to a 401k can be either NON-QUALIFIED (Roth) and QUALIFIED. 401ks in this case are the best option because there is the matching feature and your contribution limit is far greater than a regular IRA. 18,500 is the maximum amount of money an individual can contribute in a employer sponsored plan, and 5,500 is the most you can to a IRA. With exception of the catch up for people over 60 that can contribute an additional 6000. HOWEVER some companies starting September 1st will be matching the ROTH plans (401ks)
I'm so glad I found your channel, thank you Dave !!
I wish Dave was my dad or my Uncle and he’d just tell me what I’d do with my money.
Just take his money course
Hi Dave! Thanks for this video. What if my company offers 401k, but doesn’t match? Am I better off doing a Roth IRA instead?
Why i advise you do your tradings outside your company. You don't have to let them know! That is what i did, and here is my strategy i don't hold a lot of Juniors just Majors i prefer trading the juniors through a Pro only because being very much more profitable it is riskier too.
@@kathleenstoner.n7499 Smart Strategy! Pls where can i check ROIC, Free cash flow etc and again who is the Pro you work with ?❤️
"Sandra Yvonne Webster" look her up online. She's quite popular and a director with NTS in all honesty she is an Angel.
@Eric Douglas roll it over into a Roth before 60 days of leaving the job or you can leave it (if you leave it you can’t contribute to it any longer)
$401k allows you to contribute 3 times more than an IRA, but often has limited choices for funds. IRA gives you total control over what goes in it.
If I understand this correctly, I will explain what he is stating reference the “Company Match” for Roth 401k.
Let’s say you put in 4% of your paycheck into a Roth 401k every two weeks. Your contributions will go into that account.
Now, if your company matches you, let’s say 3%, then that money they are contributing will be placed into your Pre-tax 401k traditional plan and not into your Roth 401k.
In conclusion, you can contribute to your Roth 401k plan and your company will still match you the 3%. However, they will place there contributions into the 401k traditional plan.
Nick Longuski is there such a thing?
@@marcuswijaya2569 "is there such a thing?" What "such a thing" are you asking about?
What does Dave actually deserve? 😂
Simon Torres hahahaha
Simon Torres Grammy award
Nothing.
Happiness
A PHD in... something
you should always do some in a traditional because you save your marginal tax rate when it goes in and when you start to pull it out, you can pull out some tax free (exemptions/deductions) and then you pull out some at the lowest tax bracket of 10%, then 15%. So always, always put some into the traditional. It is stupid to pay money at your highest marginal tax rate that you can withdraw at a zero to low tax rate. Make sense? Help me if I am wrong.
The way I look at it is this, if you look at tax brackets over the decades it jumps up and down over time. We KNOW what we're paying now, which is a relative historic low (rates just dropped as well, along with doubled standard deduction).
We also know that the majority of american households are pulling around 50-60k, and the bottom tax bracket is the first 10k at 10%, the second at 12%. Even in retirement the average household, assuming married, will likely never break out beyond the second tax bracket and won't go below the first.
Finally, the quality of the average 401k varies significantly. Some companies offer ones with very high expense ratios and many offer limited selection on what is available to invest in. On top of this many require several years to be 'vested' and actually get a company match, if one is offered at all, and on top of this many companies only match with company stock.
Combining these things, you have families who are likely to end up in retirement in the same bracket at best but charged a higher rate, along with a plan that takes a bigger cut of your earnings, leaving you with less to draw from and what is drawn is done at a potentially income tax. Because of these things, married people will likely need to be making at least 100k before there is a clear benefit for traditional 401k, with even taxable accounts looking better for low tax brackets.
Turns out having a mildly-frustrated dad-like figure talk down to me like I'm slow is actually my preferred method for absorbing financial information. Who knew?
An important factor when considering the Roth and the traditional IRA depends on tax law and the National Deficit. We now know tax law isn’t static... there can be sweeping changes enacted in a minute. There was serious discussion about eliminating the tax benefit of traditional IRAs with the TJCA. This was shot down, instead double taxation was instituted.
The next question will be when SS and Med are depleted and or recession comes - How will the government fund itself? During the Great Recession there was talk about taxing retirement savings. Let me say that again. There was talk about taxing investments in retirement plans whether or not they were distributed.
So the best advice I received regarding 401ks and IRAs is lower your taxes as best you can today as laws ma change.
A lot of different ideas are floated by a lot of different people and most of them are never implemented, but your point is taken. I think there's a saying about a bird in the hand...
Most of the talk I've read is about taxing Social Security and pensions along with capping allowed contribution limits to 401ks. They're a long way off from being able to do anything to actual retirement accounts.
Growth
Growth & income
Aggressive growth
International
if your poor and make min wage Roth ira
The only reason to take a traditional 401k is if you’re are making insane amounts of money now. Take the hit now with lower taxes and take tax free growth.
I came here to learn how to invest after listening to a guy on radio talk about the importance of investing and how he made $520,000 in 3 month from $150k, somehow this video has helped clarify some things, but I still am confused, I'm a newbie and I'm open to ideas on how to invest for retirement.
have a goal in mind that you aim to achieve from investing and work towards that
Have a tutor or mentor on standby, someone you can reach out to for assistance
As a 1st generation investor and considering the fact that beginners are prone to mistakes I reached out to a consultant for help, as far as my journey goes, investing is much easier when you have proper guidance, since January till now, I have made at least $200,000 in profit, not much compared to the investor you mentioned but its a good start for me
@@feliciasherbert989 200 grand is not much? I would literally kill to have that amount right now in my bank account, just kidding, congrats on your success
@@feliciasherbert989 Please do you mind leaving me your consultant’s contact info? or preferably I can also leave you my email if that suits you better
My girlfriend is a stripper how does she get a 401k?
Her employer, if she is an employee, is the one who has to offer a 401K to his employees. The employer is not obligated to do so. If your girlfriend is an independent contractor I don't believe she is eligible for a 401K. In that case she should contribute to a traditional or a Roth IRA.
You get a new girlfriend
How does a stripper get a 401K? she marries you, divorces you and takes yours....
@@billcarlson8615 facts
Weird flex, but ok
Investing is worth the hard work. If you don’t save and invest now, you won’t have anything to live on in retirement.
Everyone knows only the rich retire.
There’s no limit Derrick, if investors made smart portfolio moves, then there’s high possibility that just anyone can retire rich.
I asked this question to my investor and he said "your tax rate will be MUCH lower when you retire because your income will be based on SS and any draw from the 401." I make about 300k or more a year currently so high tax rate. Net worth of over 3m pretty evenly split between cash, properties and 401k.
But now that I listen to Dave a lot more I'm wondering if that was bad advice. Pay a HIGH tax rate now or a LOW tax rate when you draw (roth vs 401k) makes sense. I'd like to know if there is a calculator that can figure that out (of course we don't know what the lowest tax rate will be in 20 years when I retire, but we can guess).
BTW, I'm DEBT FREE including the house! Have been for years thanks to Dave and Bruce Williams! :)
@J. Smart Probably. But even if I withdraw 100k a year it's still a lot lower taxes than I pay now. I've got plenty of cash and by retirement Ill have a lot more.
You pay no taxes on money coming out of a Roth. You get to deduct your contributions to a traditional account each year at tax time, so that lowers your taxable income.
How important to you is paying no taxes on distributions in retirement?
@@damondiehl5637 Doesn't really matter now.. she's tanked. :) Cash is probably next. Thank goodness I have assets.
@@mumenrider862 All this represents is a buying opportunity, another chance to get in at lower prices. By this time next year you will be patting yourself on the back for jumping in.
43 and debt free for 2 years. maxed out Roth IRA last 3 years. $40,000 to $45,000/year job which I contribute 15% to 401. Company match sucks. Very physical job. Do I take $30 to $35,000 job that is easier on body with 100% match? $50,000 left on home and always live within my means. Any advice is appreciated.
look up a youtube guy named Adam Tayofa. He is a family friend. He knows his stuff. He just recently started putting out videos (so not many views)...but he would be happy to talk to you
Dave is a financial god
I have both
Look for mutual funds with a 12% average return over the lifetime of the fund (over 10 years) and funds with low expense ratios. I recommend Vanguard mutual funds.
A lot depends on your situation and plans in retirement. Dave's recommendation for Roth may be correct for most people, but his reasoning is extremely flawed. "But it grows completely tax free, which is the larger amount [the growth] that'll be in your account." That ignores the commutative property of multiplication.
Let's say, for example, I budget $10,000 a year in contributions. For the sake of simplicity, let's say that my tax bracket is 22%. If I go with a Roth 401k and stick to my contribution budget, I've paid $2200 in taxes on that $10,000, leaving me with $7800 to invest. Let's say the investment triples. That leaves me with $23,400 that I've already paid taxes on and can withdraw tax-free in retirement.
Now let's use the same numbers for a traditional 401k. 22% tax bracket, $10,000 in, and the investment grows 3x. At contribution, I don't pay taxes, so the full $10,000 goes in. The $10,000 grows to $30,000. My tax bracket is the same, 22% -- since I haven't paid taxes, I owe $6600 on the $30000 I take out, leaving me with $23,400 in retirement.
In other words, as you might remember from math class: A * B = B * A.
So, Roth doesn't always make sense without determining circumstance. Let's say you live in Wisconsin (a state with state income tax) and plan on retiring to Florida (a state without state income tax). If that's your plan, investing in a Roth has the potential to be a pretty bad mistake. You're paying the state of Wisconsin today about 6% of your Roth contribution, but if you were investing in a traditional 401k instead, you'd be saving that 6%, and when you moved to Florida in retirement, you wouldn't owe state income tax (as they don't have any).
The same is true in reverse. If you lived in Florida now, and planned on moving to Wisconsin in retirement, it might make more sense to pay your state income taxes now (0%) to avoid them in retirement (6%).
When does a Roth become more advantageous? When you know you're in a lower tax bracket than you'll be in retirement, or, when you're maxing out your contributions. If you're putting 19,000 into a 401k, you can actually invest "more" by doing a Roth, as effectively (assuming the 22% tax bracket again), you are investing 23,180.
Thank you for explaining this in easy way
Dave...what are taxes?
Ok so if I understand this correctly, the AFTER TAX dollars put in as a contribution gets taxed?? It's like a double tax. The contribution is made up of dollars from someone's NET pay. It's a portion of the leftover funds that had been already taxed. So why the tax on the contribution?? Can someone please help me understand.
Preshit Dandekar Thanks for your reply! I was thinking that the contribution itself gets taxed, but it's the growth of the contribution.
Dave was wrong on that. Any growth on Roth account is tax free.
youre not double tax. the contributions simply arent tax deductible.
Use the calculator at AARP webpage, in my case I actually have more money after taxes if I continue to invest in the traditional 401k. What is usually the case is if you don’t want your take home pay effected, then you naturally contribute more to the traditional before tax. So more pay is being invested over the years to grow. Then when you take it out, your normally will be in a smaller income bracket. With these two facts you should come out ahead with contributions to the traditional 401K.
@@kckuc310 How much money are you making? Married people need to be making AT LEAST 100k before traditional makes sense, unless I suppose you plan on living on less than 10k per year.
The standard deduction makes it so you need to be making a lot of money to be outside the second tax bracket, and considering we are at a historic low for income tax it only makes sense to go Roth.
Secure Act 2.0 now allows employer match into ROTH, which is huge!
401K Is not a good investment, the returns are barely substantial for an average investor, however I came by an investor who grew a profit of $608,000 in 2months from stocks and I'd really appreciate tips and ideas on how to make this much profit.
I believe most people invest in 401k because they don't understand the stock market.
Just do your homework and research
Without having prior investing knowledge, one can still make a substantial 6figure profit through the guidance of either a professional broker or tutor, I got in touch with a broker in April and through her guidance i generated a profit of $350,000 with no prior investing experience of my own, just basically taking advice from my broker.
@@troeschpeter7120 who is your broker and how can i reach her?
@@gilispolls3572 Melanie Bailey Hess is my broker, I found her on a business insider magazine so i decided to check her out online and reach her, you can get in touch with her from her website if you care to get in touch with her, just look her name up online.
I am doing both, Traditional at 5% and Roth at 5%, Company is matching me on the Traditional 401K at 5% Match. I wish I knew more of what to do, but our salary is around $110K. I am on a plan to contribute 1.5% more to each until I reach 15% by age 40. We are using Fidelity, and so far have seen 14.3% growth.
Oh wow
Ok I'm about to go set one of my 25% addition to aggressive, I was always afraid of going aggressive.
How's it going?
@@kaiw.s6053 He's a billionaire now and has no time for the little people. Keep hustling brother!
If you plan on making more in the future than you do currently (which i hope you all do), open a Roth 401K.
People generally earn less in retirement though. The average American does not need to think about this. T 401k all the way
Traditional may be better if your income is lower when you retire. you'll be in a different tax bracket.
Yup, I'm learning that. Most all people will have lower income in retirement. So the rate of tax will be lower. These folks may be fooling themselves a little bit.🇺🇸🤓
My company’s match also goes into the roth
He's still advocating "growth, growth and income, aggressive growth." No mention of the danger of high expense ratios, fees, LOADs and neglects to suggest broad based stock and bond index funds. Doubt he understands the importance of asset allocation(A.A.) and that he failed to recommend an appropriate A.A. to the caller.
I always wonder why does he only promote investing in stocks, it seems like bonds are not worth it, what do you think how much percentage should be place on bonds for retirement.?
He has said before he doesn't like bonds. His allocation is 100/0
Is a 401k still worth it if your employer doesn't offer any kind of match?
Do Roth first, then 401k
Yes a 401(k) is worth is especially if it offers good investment options at low fees. If so you have $19,000 of available tax advantaged space with which to invest. As a rule you should set aside at least 10% of income toward retirement. $6,000 to a Roth IRA and as much as you can toward your 401(k) is a good basic plan.
.
The rationale given in the first reply is rather iffy.
@@alrocky thank you. 😁
Renie Handler what? So confused
A Roth IRA is different than a Roth 401K. Because the IRA has a limit but a 401K does not? Also you can transfer as much as you want to a Roth IRA? I thought the limit in 2024 was $8,000.00 over 51 years old. So when can you do more? I watched some of these and Dave was saying to move things into a Roth with large amounts of 100K etc. How does that not have a limit?
My wife has a 401k from a previous employer (about 3k) we were thinking now is a good time to rollover to Roth IRA. Is this a good idea? Any advice helps, thanks much.
Here for a answer.
I recommend you do so, find yourself a financial advisor and guide you. I got mine I can refer if your interest.
Always a big help. Thanks
I have done the math on both if you take the tax saving from your traditional 401k (that is the critical difference) and invest it you end up with the exact same return after taxes IF your tax rate is the same. So with Roth accounts you are basically paying a know tax rate now so you don't have to pay an unknown tax rate in the future. So if you think your taxes will be higher when you retire as in % wise (which you really have no idea what it will be because you really don't know what congress will due unless you are retiring soon) put as much as you can in a Roth because you will get a higher rate of return after taxes. If you think your tax rate will be lower put it in a traditional account and invest the tax savings because you will get a higher rate of return because you have invested more upfront. If you have a mix of Roth accounts and traditional 401k/IRA's then have all your high risk high reward investments in your Roth accounts, and your more safe lower returns in your traditional accounts which you will be taxes on the returns. You will owe less taxes that way.
Correct. It is better to do Traditional since you'll likely be in a lower tax bracket in retirement, and if not then somehow you're making good money and shouldn't need the money from your 401k anyways.
2 important factors to also consider is that in a roth, after 5 years of opening the account, you can withdraw from the principal (money you have added, not the growth) penalty free. Also, with a traditional account, you will be forced to make regular withdrawals at 70.5 years old until death. You don't have any forced withdrawals with a roth.
The roth basically has a little more freedom that comes with it because of those 2 things which is why I prefer it over the traditional.
If you're married your tax bracket WILL be higher at some point in the future. Why? Loss of a standard deduction and corresponding increase in tax brackets...and, yes, AND, more Social Security subject to tax...and, yes, AND, potentially MUCH higher Medicare Part B and D premiums.
Never mind whatever your state takes.
Never mind if you leave the IRA to your kids and they take lump sum distributions.
Use the calculator at AARP webpage, in my case I actually have more money after taxes if I continue to invest in the traditional 401k. What is usually the case is if you don’t want your take home pay effected, then you naturally contribute more to the traditional before tax. So more pay is being invested over the years to grow. Then when you take it out, your normally will be in a smaller income bracket. With these two facts you should come out ahead with contributions to the traditional 401K.
This is much more realistic and detailed.
Roth retirement account is a no brainer
If her business offer a regular 401k and a Roth 401k. Should she only do a roth? 401k? Or 50/50? I missed his answer...
Great info
Guess I’m confused : he says there’s no match on Roth but if you do it then contribute up to your match so I’m lost on that
devon Hall i think it’s because even if you choose to do the roth 401k, the company will still match it (up to their agreed percentage), but their portion goes into a traditional 401k even though your portion is under the protection of a roth 401k
@@giovannijmendez Yes, this is correct.
2:37 gave me flashbacks to Family Guy
The people that I have my roth ira with do I just tell them I want my money spread 25% in each 4 category and they would find it for me or would I have to look them up or something?
can one do both. 401k matches 5% of my income. can I put into both? so can I do a 401k at work getting that 5% and then open a roth ira with usaa?
Yes you may contribute 5% of your income to your 401(k) to get the the 5% company match and also open a Roth IRA. It's a good idea to do both. A better idea to invest as much as your income and budget allows.
what does he mean when he says: 25% of contributions put into mutual funds..
Wait so is a Roth 401k better than a Roth ira? I’m 19 and still a bit confused !
No. You can do both. In fact you should probably being doing both once you can afford to.
@@nunyabidnes6010 I make about 400 a week, and I just opened a Roth ira but my bank says it’s just like a savings account and I can open it at any time with no penalty.. how can I do the compound interest part though?
You can put three times as much money in your 401k, each year ($23k vs $7k). But the funds offered might not be that great. (If they offer a fund that mimics the S&P500, that's a great option)
@@sikandersbustymoves9283 The assets you put in it have to grow or pay interest/dividends. Talk to your bank about how you add assets to your IRA.
You can also open a brokerage account with a company like ETrade or Schwab or Fidelity or Vanguard. Then you can buy stocks, especially ones that pay dividends.
If a retirement fund is your money anyway why not just save it in a separate account, how much of a hit will you take per 10 year period with the lower interest rate?
The best show ever
Thank you!
He's completely wrong. The growth in the traditional and roth 401k's are tax free as well. You don't pay taxes on the growth of your account each year. You only get taxed on the amount you withdraw each year at retirement. So if your tax bracket is higher now then it will be in retirement then you are better off going traditional. if you think you will be in a higher tax bracket at retirement, then it's better to do the ROTH.
You are contradicting yourself in your statement. Roth pay taxes now, pay no taxes at retirement. Traditional, no taxes now, pay taxes on withdraw.
@@JohnDoe-fg9ng not sure what you mean. I don't see the contradiction. Say you make 100k now and are in a 25% tax bracket. That means your take home pay is $75k, if at retirement you are only pulling 80k from your traditional 401k account and your tax bracket is 20% you are only paying 16k in taxes. Therefore it is better to take the tax deduction up front (because you are getting a 25% benefit) rather than when you retire only IF you are sure that your income in retirement will be in a lower tax bracket then you are in currently.
Even though I am a high income earner now, I still do the ROTH 401k because it does not have mandatory withdrawals and I can tax plan between pulling out the employer match portion (which is taxable) and my portion (which is tax free).
I'm 30. I have $33k in traditional 401k. Should I roll that into a roth 401k or should I keep it in a traditional 401k? I was told I should wait and see if taxes drop due to tax reform before I do that.
If you see yourself taking part of a year off of work that would be a good time to do it, since when you roll it you'll be hit with the taxes that year. Taxes have dropped and standard deduction has been doubled so now is as good a time as any.
very good and basic question which really help us, thanks how Roth know this amount already taxed?
Just got through visiting a finance person and they said when you roll your 401k into a Roth, you are taxed and it counts as income! Not happening Dave. I decided to rollover into a traditional IRA to take ALL my retirement savings and avoid being taxed. If you have a bunch of money and anticipate substantial growth in the future (and want to pay all the taxes on it out the door) go with rolling your 401k over into Roth. I literally went to the bank and hollered ROTH!!! Dave Ramsey said it! I want a Roth🙈 oh... the learning process.
Just to clarify, by rolling your traditional 401k to a traditional IRA you're not avoiding paying taxes, you're delaying paying those taxes until you withdraw from the traditional IRA.
If you borrow some contributions, are you allowed to replenish the amount later ?
As you stated, "the growth". What type of growth can you expect in a market that keeps on correcting? mutual funds do not give you any guarantees. The only difference between "checking a box" that says conservative, instead of high risk, is that your losses are smaller. Not even including the hidden fees of 401K's...
+Eduardo Ayala I've come to believe that the stock market is generally a sham. It's better than doing nothing, and the company match is good, but: future returns are only a prayer, you can't leverage or insure your money, fees can eat away at your bottom line...I'll stick with real estate and businesses...
I have a question. What if I start my IRA when I have a stable job & a few years later I quit & start a small successful business?? What will happen to my IRA ??
Nothing, other than it sits there, and hopefully grows in value. If you have earned income, you can keep contributing to it.
If you are self employed, you can create a Solo IRA or SEP IRA and contribute a lot more each year than can be contributed to a standard IRA.
on one hand he said no company match with Roth 401k, then at the end, he said 'get the Roth 401k at least up to your match'... which is it Super Dave
Yes! I caught this too, and I'm so confused!
If your company matches 3%. You can invest 3% into your Roth 401k and they will match 3% also. But the 3% that they match will be traditional while your 3% will be Roth.
This is what I understood.
Lots of companies offer a match, but not all of them. It is something to consider when you decide whether or not to take a job. My company offers a 3% match, but they pay it once per year, for the total past year. You have to be an employee on December 31st to rate that year's company match. My contributions go in each pay period.
UPDATE: as of 2024, both your contribution and the employer match can go to the Roth account.
Ok got it. What if my company only has a 401k. But are planing to offer the roth401 in about 2 years or so. Should I open the 401 and then switch over when the 401roth is available or wait. And do the Roth IRA maxing my 15%. And when they offer the 401roth I can then lower the IRA by w e the job matches? ?? To balance the 15% .
You can convert a traditional account over to a Roth, but you have to pay taxes on that money as part of the conversion, as the traditional accounts are funded with pre-tax dollars.
Start investing now. The more time you give your money to grow, regardless of which type of account it is in, the better. When your employer starts offering a Roth 401k, you can redirect your new contributions to the Roth 401k. The employer match will still go into a traditional account.
Google is an amazing tool...
so is youtube
I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts totalling over $250k. I took a big hit in Q2, 2023. Right now i am just looking for ways to recover in 2024
There are a lot of strategies to make tongue-wetting profit especially in this down market, but such sophisticated trades can only be carried out by proper market experts;;
I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k 'after the 2020 crash. I however, invested the money using an analyst, and in seven months, I raked in almost $673,000
this is all new to me, where do I find a fiduciary, can you recommend any'?
Sonya Lee Mitchell ’ is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment/
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/.
Great explanation. Totaly off the topic question. I hope you don't mind. What kind of headset are you using? The sound quality is very good and I'm in need of one with exceptional sound quality for my livelihood.
Justin Becker dr dre
So if you do it through your job and it’s automatic, what does he mean by investing the same money into mutual funds? Like you can control where the 401k money is invested? I’m a little confused tbh
SJ Francis yes, you decide where to invest your money.
So I if I invest in the Roth 401k through work with a 4% match does that mean I cannot open a separate Roth IRA through a different broker?
Is international the same as ETF ?
Go Vols!
Confused because he said they don’t match with Roth401k only traditional then he later says to get the Roth401k at least up to your match. So which is it or what did I misunderstand?
Before 2024, your 401k contributions could go into a Roth account, but the employer match had to go into a Traditional.
As of 2024, both contributions can be Roth.
Should I do a 401k with my company that doesn't contribute?
Sure if you'd like to save money toward retirement and assuming the investment options are good and the fees are not high. You can also contribute to a Roth IRA.
My work offers 403B and Roth deferral. I contribute 10% to my 403b. Should I also contribute to my Roth deferral?
Biggest different is limits and constrains.
Use the calculator at AARP webpage, in my case I actually have more money after taxes if I continue to invest in the traditional 401k. What is usually the case is if you don’t want your take home pay effected, then you naturally contribute more to the traditional before tax. So more pay is being invested over the years to grow. Then when you take it out, your normally will be in a smaller income bracket. With these two facts you should come out ahead with contributions to the traditional 401K.
If you don't mind me asking, what tax bracket are you in now and why / how will you be in a lower tax bracket?
Dave says the match is only in the Traditional but then he recommends to go for the Roth to get the match? He is mistaken.
Also, mutual funds are dangerous. One should invest only in index funds (ETFs). Mutual funds have very high fees and are proven to underperform index funds in the long run.
+brco2003 I agree with what you are saying about index funds being better than mutual funds but you misunderstood what he was saying about the match. The match exists whether you do traditional or roth but he was saying that if you do roth then the match portion will still have to be taxed upon withdrawal because it wasn't taxed on the way in.
+James, D.R. likely mistakenly believes that the Roth is superior in all or most cases. He of course is wrong especially since he didn't ask the caller any specific questions about her tax bracket and other questions which would determine if Roth 401(k) or traditional 401(k) would be better for her.
Pretty sure he's saying that the Roth portion would be matched, but that that match would go into the traditional.
@jackson
That's exactly what happens.
100% agree. "Dangerous" when it comes to a method of investing?
Hyperbole JUST A BIT.
Also, as much as I like ETFs one can't make a statement that ETFs have "proven" to outperform mutual funds. There is no such proof. Simply look at the American Funds Investment Company of America. About as plain vanilla of a fund as one could possibly get. Yet...
Should I do a pre tax or after tax 401k in addition to my roth?
I have a question, maybe someone can answer it. When you do baby steps and get to baby step 3 which I believe is taking 15% of your income for retirement. Is he talking about 401k and Roth IRA or is this a different savings we talking about.
Yes, invest 15% of you gross income into a retirement fund, such as a 401k or IRA. 401k and IRAs can be Traditional or Roth.
I don't currently have anything in a IRA or 401k. I can put $3000 in an account today. I'm 35 and unsure which one to go after and what institution I should look into? I'm a veteran as well and don't know if I should check into USAA or Navyfederal.
Does your job offer a 401(k) and if so is there a company match?
@@alrocky no it's Union. I'll be vested around July of 2020. I'll be leaving shortly after I'm vested for school again. It'll bring me approximately $150 a month once I'm retired. That's all I currently have.
I'm lucky to get 4% to 5% growth over my lifetime. Where they get 8% who knows?
I made 16% on my roth that I manage myself.
Mutual funds
Drackkor my growth is negative lol
Yea I'm starting to think that those who blow there money and have all the toys are better off than me giving my money to wall street so I can see negative numbers :(
Drackkor he talks about S&P, which has a history of over 8%. Talk to your advisor about switching into index funds less of a fee, by greater return
$95K-$24K std deduction=$71K, which is no tax with 4 Kids, $8K child tax credit, tax free has less meaning
DAVE! Could you please do a video on target date funds! or if already have done so provide a link? Have heard good things about them and opened one but could you give some insight on them please.
A target date fund will invest your contributions into several of the other mutual funds or ETFs offered within the 401k. When you're younger, a larger portion of your contributions will go into aggressive/growth oriented funds. As you get older, the investment allocation will get progressively more conservative. It's good for people who want to take a hands-off approach to their retirement savings, since this reallocation from aggressive to conservative happens automatically.
I'm 23, my company offers a really good pension so I'm not too worried about the retirement part of it, but I would still like to invest a good portion into my own roth ira for retirment and also a good portion into an account that I can take out in 20-25 years when I'm about 45. What's the best non-retiremnt account I could invest that into and with my company already offering a pension, how much % should I be putting into my own roth ira and how much % into my 20-25 year non-retirment account?
Generally you should max out your Roth IRA @ $6,500 every year before considering taxable brokerage account.
Dave, I am looking into opening a roth ira. Through work they offer a 401k program which matches 6%, I put in 14% and all in a Roth. I was looking into a separate roth ira to put more away. Will they let me open a separate roth ira if i am already maxing out my roth 401k? I am 23.
zs k
You can open a Roth IRA.
My 401k is also a Roth 401k and 95% self directing.
I have 4 Roth IRA accounts.
zs k yes you can put an extra 5500 a year into the Roth IRA.
BlackWorldTraveler why would you have that many Ira account?
joey vettese
Accumulated them through the years. Different brokerages.
Your job has no say on whether or not you can open a Roth IRA and they don't care if you do. The 401(k) contribution limit is is $18,000. Are you really maxing out your work 401(k) @ $18,000 at age 23? If so that means @ 14% you make ($18k / 14% =) $128.5k a year.
What fund do you recommend?
Dissapoints me that none of my schools ever taught me about this stuff. Pisses me off
Between 1:40-2:13min I am hearing two different things. You said the company match would not be in the Roth, but only in the 401k, then you said you recommend we get the Roth up to the match. If there's no match for Roth, then what do you mean? I am confused. I currently have a regular 401k, and my company matches it up to 3percent. I am trying to figure out if it's more beneficial for me to get the Roth or not, but if the Roth doesn't match then, I'm just getting my own money back at the end of the day, right? Also, when is the earliest you can pull from this account and is there a charge before retirement?
Company match goes into one's traditional 401(k) account. Let's say you contribute $400 and receive a $400 company match: if you contribute $400 toward your traditional 401(k) you receive $400 company match into your traditional 401(k) account; if you contribute $400 toward your Roth 401(k) you receive $400 company match into your traditional 401(k) account.
Whats a good bank to open a roth IRA or does it matter?
I signed up for my company's 401k but I don't think I can run that far -Norm McDonald
Can someone please explain the last part about the mutual fund? Is he referring to IRA or 401k?
An IRA and 401k are types of accounts, and mutual funds are a type of investment that goes into the account. Like having savings and checking account at the bank, they are treated differently. The government gives special treatment to retirement accounts to encourage people to save for retirement, thus the IRA and 401k accounts were born, on top of it these accounts also have Roth versions. Roth versions pay tax today so they don't have to in retirement, traditional ones pay no tax today, but pay it in retirement. High earners favor traditional, lower earners favors the roth.
My employer offers both a 401k plan and a IRA account that I can put into from my salary automatically. They match 50% of my contributions up to 10% of my salary. What do you recommend in this scenario.
Invest 15% of your gross into your retirement account and you will be well off in retirement. The employer match is above and beyond your contribution.
Sorry, but historically speaking, most people will have less taxable income in retirement and will therefore pay less tax overall. Plus, you'll be earning additional gains on that extra pre-tax investment money from the traditional. Roth does give the advantage of knowing that you won't be paying taxes in retirement (as long as the government doesn't change the rules), and if you know you'll have high earnings in retirement Roth is the way to go. BUT... for Dave to just make a blanket statement to get the Roth, without first considering other factors, is NOT good advice!
Historically, in the past that was true. Recently the tax brackets have changed along with the standard deduction. He should ask people what their marginal tax rate is.