Roth IRA account

[siva604]

https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/

 

Though i have Fidelity account i followed this steps literally. Invested that $6000 in AMC and turned it into $30,000.

[siva604]

4 hours ago, Flaber said:

Hello Everyone

I am thinking to open a IRA account(Leaning more towards Roth IRA)..do you think Roth IRA is a good idea? Also I am think about opening an account In vanguard..Can we hold 401k and Roth IRA accounts simultaneously? Any tax benefits with Roth IRA? Which Index funds should i look into as a beginner? Any additional information or suggestions would help..Appreciate for your help again!

Yes. If you are under high income catergory you can do backdoor ROTH. 

Pros:

Tax free growth of your money

Cons: 

Post tax money investment

 

https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/

[idibezwada]

2 hours ago, Pavanonline said:

I didn't understand, how are unpaid taxes "growing". 

Say you are making 100K and you are being taxed 25%

Traditional - 6k before  - So you are paying taxes on 94K

ROTH - 6K after tax (= 8k before tax) - So you are paying taxes for 100K

So say if you are getting a return of 10% a year on your contribution, 

Traditional - $600 for 6k

Roth - $600 for 8k

Roth is beneficial only if your rate of return is high and you are expecting that you will be taxed more after retirement

[Pavanonline]

11 minutes ago, idibezwada said:

Say you are making 100K and you are being taxed 25%

Traditional - 6k before  - So you are paying taxes on 94K

ROTH - 6K after tax (= 8k before tax) - So you are paying taxes for 100K

So say if you are getting a return of 10% a year on your contribution, 

Traditional - $600 for 6k

Roth - $600 for 8k

Roth is beneficial only if your rate of return is high and you are expecting that you will be taxed more after retirement

As this is retirement account assume i'm withdrawing lets say after 20 years, wouldn't the the returns compound over time? at 10% assumption or lesser, your returns will be much higher than what you invested. 

at 10% per year on average for 20 years your investment of 6k is going to grow to 40k and at if return is say 5% its 15k return which is still higher. And i'm also not considering year by year contributions as well which will swell your return even more.

Please correct me if I'm wrong

 

[idibezwada]

1 hour ago, Pavanonline said:

As this is retirement account assume i'm withdrawing lets say after 20 years, wouldn't the the returns compound over time? at 10% assumption or lesser, your returns will be much higher than what you invested. 

at 10% per year on average for 20 years your investment of 6k is going to grow to 40k and at if return is say 5% its 15k return which is still higher. And i'm also not considering year by year contributions as well which will swell your return even more.

Please correct me if I'm wrong

 

20yrs span kinda chuste obviously roth is better

[bayarea]

mannam retirement lo unnapudu income will be lower (unless rentals kani verre income from other sources) so tax rate will be much lower comparatively than now when you are earning in full swing so 401k might be an advantage since you pay taxes when you withdraw

At the same time, Roth IRA lo you are paying the taxes now and everything grows tax free.

No one has a crystal ball to predict how your tax rate is going to be when in retirement so renditallo oka rayya veyyadam better. But roth ira ki salary limits unnaye kada. backdoor is only 6K per year unless you employer allows mega backdoor to transfer after-tax 401k to roth ira.