January 03, 2021
What is a Roth IRA (Individual Retirement Account)?
- Money is added after tax is taken out
- Deposits are not tax deductible
- Withdrawals are tax-free, once certain conditions are met
- Can only contribute if you make less than $140,000 per year for a single person(rate is likely to change in the future)
- Withdrawals are tax-free and penalty free after you are 59 1/2 years old, and it has been 5+ years since your first funding contribution to your Roth IRA.
- You can withdraw contributions without penalty or tax, but any gains will be taxed and possibly penalized if you don't meet the previous rules.
- Name beneficiaries
- Don't withdraw too early
- You can't contribute if you make too much money
Simple Path to Wealth
- Stocks: Total Stock Market Index Fund - at roughly 50% of your net worth
- Bonds: Total Bond Market Index Fund - at 40ish% of your net worth
- Cash - for the rest.
- You can fine tune your investments: For safer, longer term investing; increase the percentage in your bond fund.
REFERENCE: JLC Stock Series