I'm 18 years old and I was doing a little bit of research and looking at a Roth IRA and a Traditional IRA. Which one would be better for me and how much should I put in to start off and how much do you recommend me to continue adding? I have about 10,000 in the bank right now if that helps. Any thoughts would be appreciated, thanks!
2007-12-27 18:37:51 · 6 answers · asked by Anonymous in Business & Finance ➔ Investing
A. Stay away from "Proper" or any other specific suggestion you receive. keep in mind, you don't know the qualifications or motives of anyone on Yahoo Answers.
B. My vote is for the ROTH IRA. Do your own research! Stay away from banks and Insurance Companies for "investments".
2007-12-27 23:47:19 · answer #1 · answered by Common Sense 7 · 2⤊ 0⤋
Traditional IRA. Many reasons.
Take a deduction for the IRA now. Pay taxes later in life with a dollar that is worth less than today.
You'll have more money working for you now. Reinvest dividends.
Plus, anything the general public and the government wants you to do cannot be in your best interest.
Always invest in No Load and non 12b-1 funds. Max your IRA each year if you can.
If you own your own business or have real estate that generates tax deductions, a Roth IRA would be better.
Reason is your effective tax bracket will be so low @1% ~ 5%, your better to pay that tax % now rather than 15% later.
Hope you understand.
2007-12-28 16:27:46 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The stock market is good for long-term investing, so it's good for IRAs. It doesn't matter what the value of the stock is tomorrow or next month - it only matters what it is twenty years from now when you retire. In the long run, the stock market tends to grow, and so will your investments. What you are doing is called "dollar cost averaging". You invest a small amount each month - sometimes you buy the stocks at a high price, sometimes at a low price, but they average out to a fair price in the long run. You can also think of it this way - the value is down, but so is the price. It's like buying a car on sale. It's cheap now - but will it go even more on sale later? Will you be able to sell it for full price later? How long do you wait to get the best price? That's why dollar-cost averaging works well, because you end up paying for a lot of little things - some on sale, some full price, but on average you get a good deal.
2016-05-27 10:06:26 · answer #3 · answered by kaley 3 · 0⤊ 0⤋
At your age, the Roth is the way to go - but to contribute to any IRA, you must have earned income. See www.ira.com for the rules.
2007-12-28 05:33:22 · answer #4 · answered by Anonymous · 0⤊ 0⤋
You're good. You should start saving for retirement as early as possible. I bet you already know the power of compounding interest. It is better to go for Roth instead of Traditional.
Have you thought of investing in stocks or Prosper?
2007-12-27 18:55:01 · answer #5 · answered by Anonymous · 0⤊ 1⤋
Yes. You can put $4,000 into one in this tax year which is over April 15th. It then rises to $5,000 for the 2008-2009 tax year. Not a good move, a great one!
2007-12-28 14:06:37 · answer #6 · answered by Anonymous · 0⤊ 0⤋