With Taxes At A Low No Better Time For A ROTH IRA

With Taxes At Historic Lows 

No Better Time For The ROTH IRA

Hello Rookies

If you haven't noticed your pay checks getting bigger in 2018 - then you have not been paying attention.  The federal tax brackets take a huge dive downwards resulting in more money in your pocket.  If you missed the update check the 2018 tax consequences HERE

What do you plan on doing with that extra money?  Some FinanceRookies will find themselves with thousands of extra dollars this year.  While great ideas include saving in a 401k or investing in a fee free brokerage like Robinhood - consider opening a ROTH IRA.

roth ira

Named after Delaware senator William Roth, a ROTH IRA is a legal way to not pay taxes  

 ROTH IRA is simply an investment fund that uses post-tax dollars to invest in the stock market.  Anything you make is yours to keep, tax free

 The most alluring part of a ROTH IRA : any money that you make is yours to keep, tax free.  You will not owe federal income taxes on any money made in a ROTH IRA

Back to historically low federal tax rates...

If you were to save extra money in a 401k - you will eventually need to pay taxes on both the money you take out as principle investment and any earnings that you made.  Do you think that taxes will be lower when that time comes?  

If you were to save extra money in a private investing account that you manage you would owe taxes on all earnings

If you were to use extra cash in a ROTH IRA - you can take advantage of the low federal tax rates now AND not have to pay a dollar in taxes on earnings that you make

The winning choice seems obvious

Remember, always save at least the minimum amount that a company matches in your 401k.  Free money is never worth giving



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