my husband and i have 3 kids 2, 3, and 12, i heard from a friend that Roth IRA's are quite profitable. can anyone give me some idea of what a Roth IRA is and how it woks? I have'nt a clue.
2007-03-06 16:51:17 · 5 answers · asked by weasleywanabe 4 in Business & Finance ➔ Investing
A Roth is only as profitable as the investments you place WITHIN the Roth. The big advantage of the Roth is that all the gains you'll make over the years will be TAX-FREE when you finally take qualified distributions at age 59 1/2 or older. As for being a college fund, you CAN take out your contributions at any time for any reason, so it COULD help pay for college, but one shouldn't use it for that if at all possible. Better to fund your own retirement and let the kids get school loans. You can't get a loan for your retirement! :)
Once you're funding your own retirement, and if you can still afford to put more away, THEN look into a 529 plan for your children's education. Check out www.savingforcollege.com for the best 529 plans in the country. Often, choosing your own state's plan works well because you'll get a state tax break.
2007-03-06 17:04:00 · answer #1 · answered by LongArm 3 · 0⤊ 0⤋
You can put money into a Roth IRA and take an allowable distribution for qualified higher education expenses, however, you have to pay tax on the money. You should really consider investing in a 529 plan. The money is absolutely federally tax free and also many states have benefits as well. Here is a great link where you can read up more on the 529 plan. I'm sure it is by far the best method of saving for education if you're sure that is what you will use the money for when the time comes.
http://www.babycenter.com/refcap/baby/babyfinance/1263733.html
Good Luck!
2007-03-06 17:14:24 · answer #2 · answered by k_hart100 3 · 0⤊ 0⤋
It would be better to use a 529 plan. You still get the tax-free advantage, it is not subject to your income, and it is transferable. You would also then be able to contribute to the Roth for the purpose for which it was intended; your retirement.
2007-03-06 17:57:00 · answer #3 · answered by Rob D 5 · 0⤊ 0⤋
It somewhat relies upon on the investment stategy of the Roth IRA. lots of them could nicely be investeted in mutual money as nicely. the reward of the Roth are that it could used for retirement if she gets a scholarship or provides you and additionally you will not face a great tax burden. There are not any activity penalities if the proceeds are withdrawn for guidance on a Roth. One sturdy element some Roth is which you have already paid the income tax on the money used to fund it so basically the proceeds are taxable, and basically whilst the money is actual dispersed. the probability is that at age 60 or so in case you decide on the money your tax bracket would be notably decrease. Max out the Roth contribution in case you are able to because it is going to serve each and all of the needs you have defined. on the grounds which you in all probability have numerous years till now the money is mandatory, you're able to nicely be particularly aggressive to aggressive and with a bit of luck comprehend some sturdy returns over here few years.
2016-10-17 11:16:37 · answer #4 · answered by ? 4 · 0⤊ 0⤋
Yes its a good idea but invest in a few places a little in stocks bonds Cd's a little http://www.shaklee.net/qualitylife/distMain
a little in savings bank good luck I just got this advice from a financial adviser
2007-03-06 16:56:21 · answer #5 · answered by Anonymous · 0⤊ 0⤋