Investing for Owner Operators
#31
09-22-2008, 09:35 AM
Originally Posted by mdf1576
There is no tax on the distributions for a Roth IRA. So if the account is worth 1 mil you,ve invested 200k, you come out waay ahead. Its the only way to go. Why do you think the govt restricts how much you can put in each year.
I am gonna diversify as much as I can and I think both could be good but for different reasons,and yes I am gonna do a target retirement fund from Vanguard.
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#32
09-22-2008, 10:36 AM
There is no tax on the distributions for a Roth IRA. So if the account is worth 1 mil you,ve invested 200k, you come out waay ahead. Its the only way to go.
You're missing a key component in your math. Namely, the additional principal that you sacrifice to taxes every time you make a Roth contribution. If you pay 25% in tax how much do you need to earn to make that $5000 Roth contribution? $6667. So you have two choices; invest your after tax income in a Roth ($5000) or your pretax income in a tax deferred vehicle ($6667). Assuming all variable are constant, including pre- and post-retirement tax rates, your return will be exactly the same. As far as...
Why do you think the govt restricts how much you can put in each year.
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