Should I turn in my $1700 dollars in I bonds and start a Roth IRA?

Question

I have a 403B with about $45K in it and recently I won an award and was given a check for $1000 bucks. I started putting money into I bonds.....actually about $50 dollars at a time. Should I cash in the I bonds and invest in a Roth?

Answer 1

If your time horizon is long, then you will probably make more money in an IRA using a mix of mutual funds.

Remember that you cannot cash in I-bonds until you have held them for at least a year. Also, if you cash them in before a 5-year holding period, you forfeit some of the interest. Also, when you cash them in, you will have to pay taxes on the interest by reporting the interest on your tax return that year.

Many IRAs need at least $3000 to start. Some firms, like Fidelity, allow you to start with only $200 per month.

Good luck.

http://www.invest-for-retirement.com

Answer 2

What is the base rate on your I (US?) bonds, and how long have you held them? What vehicle would you use for the Roth? The numbers aren't here to make ANY decision. You should always try to fund a Roth if you can do so financially.

Answer 3

Yes, an IRA is a great choice, but I wouldn't rule out the Traditional IRA yet, if you qualify for the full tax deduction. Roth's may be good for you later and you can have both types in your portfolio. If all depends on if you need another deduction for this year or not. Here's the income requirements for deductability...

For a Traditional IRA, full deductibility of a contribution for 2006 is available to active participants whose 2006 Adjusted Gross Income (AGI) is $75,000 or less (joint) and $50,000 or less (single); partial deductibility for AGI up to $85,000 (joint) and $60,000 (single). For contributions in tax year 2007, the full deductibility AGI limits are $83,000 or less (joint) and $52,000 or less (single); partial deductibility for AGI up to $103,000 (joint) and $62,000 (single).
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Answer 4

you'll make more interest.