Quote:kbell Wrote:
I have some extra cash in my checking account. I heard somewhere that if you get to 10k you start getting taxed.
What? Are you in the USA? You don't get taxed on the amount of money in either your checking nor savings accounts. That's the kind of shit they do in Ukraine!
Quote:kbell Wrote:
Should I be putting money into a Roth IRA?
Yes.
Quote:bacan Wrote:
Roth IRA is tax free earnings, but you can't withdraw it until requirement age obviously.
Not true. Roth IRA contributions can be taken out at any time -- tax free. Also, you can remove funds for emergencies such as medical expenses without penalty.
Currently, the yearly maximum contribution to a Roth IRA is $6,500. Let's say over four years you contribute $20,000 and it growth to $50,000 over the ten years after that. You can always take that original $20,000 back out without penalty. If you touch the $30,000 (read: realized gains) before proper age or emergency circumstance, you will pay a hefty tax.
Why is a Roth IRA tax free? Because you already paid tax on what you put in. The money you take from your paycheck and put in the Roth account will still be added into your annual income bracket and taxed. It makes sense not to pay tax on it when you withdrawal...you've already paid it forward. Remember the Time Value of Money...you paid $500 in tax to gov't ten years ago...if they would invest that wisely, they could realize the same gains you see in your account (but they don't).
kbell: It sounds like you are just over the 10k hump (somewhere between 10-25k). At this stage, you need to contribute the 6.5k to a Roth IRA. Also, ask HR at your work if they match contributions to your work IRA. At my previous employer, they matched up to 5%. That's free money. Increasing your contribution means you bring home less money but you can keep that nice little account long after you leave that employer.
Your not ready for real estate/time share/intellectual property investments.
Mutual funds are dead.
ETFs/Index Funds are the way to go.
Don't ever take individual stock picks from friends or especially from anyone over the internet. The worst loss on a stock (over 90%) I've experienced was from a "friend's tip." Luckily it was only a couple hundred dollars.
If you lean more toward ceramics than calc, open a Roth IRA and purchase the Wilshire 5000. It includes all of the small startups (read: Apple in the 80s) as well as the big boys to balance your risk. This isn't an individual stock tip because all I'm saying is "buy the whole market."
Warren B has said the same thing...if you aren't in finance, just buy index funds. He also recommends buying his BRK shares -- can't blame the man lol
Source: Personal experience, trial and error