Should I use a Roth IRA or regular Savings account?
If you don't really plan to use the money for anything but retirement a ROTH is a fine decision. However, you can take out any CONTRIBUTION in a ROTH ira without penalty or taxes since they are after tax contributions. Any EARNINGS on your contributions are subject to taxes and early withdrawal penalties. I think you would have to provide a bit more detail for me to determine what the right choice would be. Based on what I know, I would just stick with a regular savings account for now.
You have $500,000 in an IRA (Individual Retirement Account) at the time you retire. You have the option of inv?
You have $500,000 total to invest. If you invest X in the 3.6% account, then you must have invested $500,000 - X in the 6.1% account. The formula to solve is therefore: 3.6%(X) + 6.1%(500,000 - X) = 25,750 Now solve for X. The formula reduces to: 6.1%(500,000 - X) = 25,750 - 3.6%(X) Which further reduces to: 30,500 - 6.1%(X) = 25,750 - 3.6%(x) Which further reduces to: 4,750 = 2.5%(X) Which finally reduces to: 190,000 = X So then 500,000 - X = (500,000 - 190,000) = 310,000 So the amount invested in the 3.6% account = $190,000, and the amount invested in the 6.1% account is $310,000, You can prove this out by solving for: (3.6% X $190,000) + (6.1% X $310,000), this equals $6,840 + $18,910 = $25,750 - and you've proved your answer.
What are the pros & cons of ira accounts?
Interest paid on cd's have a lower return rate than IRA's. A CD has a return based on current rates set by banks. IRA's funds are spread over different accounts in the stock market and there are many different accounts it can be invested in so if one drops 2 others might have a huge increase. Also funds for an IRA are taken out of your pay at work (if they have a retirement program) and you dont pay taxes on them until you retire which by then you are in a lower tax bracket. Also when they are taken out of your pay and put in an IRA-401,457, or other program, you only pay present taxes on what you take home, not what has gone into your retirement fund. (I tried to simplify) m
Is it good to open an IRA account with Wells Fargo?
There are really two question here:1) Should I open an IRA?2) Should I open an IRA with Wells Fargo?When you make the decision to open an IRA, you’re choosing to prepare for retirement.Consider this: When you’re ready to retire, only 1/3 of your personal wealth will come from the work you do every day. 2/3 of it will come from investment decisions!Given this, I’d say that opening an IRA is not just a good idea, but an imperative one!An illustration of the power of compounding here (just as an example):Now, you can open an IRA with most large financial institutions. Wells Fargo is just one among many choices available to you.But opening an IRA is not enough. What are you going to invest in once you have your IRA open? As you can see from the above image, achieving a good ‘growth rate’ is critical to growing your IRA!First, there are different kinds of IRAs.The two most popular types are traditional and Roth. The main difference between them is when/how you pay tax on the money you put into them. Taxes can make all the difference when it comes to having enough money saved for retirement.So take some time to figure out which IRA works best for you.This article breaks them down nicely:Differences between Traditional IRA & Roth IRASecond, when you choose a service for opening your IRA, it’s important that they can make the most of your savings.You don’t want it to get killed by fees, or plopped into some run of the mill, pie chart of the market portfolio.You want more investment options, transparency on what is your IRA being invested in and more control.I’m just going to leave this with:Active Management and IRAs go hand in hand because of the tax advantages in the IRA account!References:[1] Is a Roth IRA better than a traditional IRA?[2] Can you have a traditional IRA and Roth IRA at the same time?[3] Invest in Roth, Traditional, SEP IRA | qplumDisclaimer: All investments carry risk. This is not a solicitation to buy/sell securities. This is not an offer of personal financial advice or legal advice. Past performance is not indicative of future performance.
Explain the advantages and disadvantages of a personal savings account?
Your money is insured by the FDIC. (safety) You can put more money into savings as well as taking it out immediately. (liquidity) A savings account pays interest. (return) The one big disadvantage at this point in time, is the interest rate is so tiny that you are actually losing money to inflation.
Can someone please explain this detail of the 60-Day IRA Rollover rule?
I am under age 59 1/2. I want to take an amount of cash from my IRA and do a "rollover" into another IRA. I understand that if I take a cash distribution I am subject to current taxes and a 10% penalty if I do not complete this rollover within 60 days. My question is this - If I take the distribution in December, then complete the rollover (re-deposit the money) in January, what is my tax liability? This transaction will have taken place over two tax years; I will have to report the distribution on my 2011 1040, but I will not be able to report the rollover until 2012. How will this be handled? If you do answer this and do give an opinion, I'd be grateful if you could link to the IRS ruling or some article that explains it to me. Thanks
What is IRA's equivalent in India?
PPF - public provident fund is the closest match. You can invest up to 1.5L every year and claim tax benefit under section 80C. Interest earned is close to 8.5%(8.0% in 2016) and tax exempt. You can withdraw the money prematurely only under certain circumstances like marriage, education, house etc.This can be opened at any post office, nationalized banks or few private banks.
Can you explain the benefit of Roth IRA as opposed to just investing on your own?
Basically the growth is tax free. With investing on your own you still have to pay capital gains (short term or long term).However, there is always a price. If you invest on your own you can do whatever you want with the money whenever you want. With a Roth IRA you can take out your contributions anytime but the growth has to stay in until you reach retirement age.
What is an IRA FBO?
Two uses of the term “FBO” (For the Benefit Of). One is used during the life of the owner in his or her own name. It may be titled something like this; “Rollover IRA, FBO Rex Moore”. The other is used after the owner’s death. For instance when Rex dies the title may change to “Rollover IRA of Rex Moore, FBO of Alice Moore”.In this case, the IRA owner’s name stays on the statement but the required minimum distributions, or RMD, are paid out to Rex’s designated beneficiary - in this scenario, his daughter Alice. This serves as a reminder to us all that having a living breathing beneficiary for each and every IRA designated in writing is critical to keeping the IRS as far away from your IRA cash as much as possible.With a designated beneficiary the IRA RMD can be spread over many more years - thus spreading taxation over the same period and often at lower marginal tax rates.Get a free copy of IRS Pub 590 on IRAs at About Publication 590B | Internal Revenue Service. it will provide you with detailed information in either PDF or html formats. It’s a favorite of mine for bedtime reading to the kids. :-)
Is an IRA a mutual fund?
No, they're two separate things. Let me explain.A mutual fund is a grouping of various financial instruments that are managed by an individual or a group of people. These financial instruments may be shares of stock, bonds, options, or other securities. This mutual fund has a value that is calculated based on the total net worth of all the securities that make up the fund. This is greatly simplified, but this is sometimes called the net asset value, and is calculated daily.Mutual funds are offered by many financial institutions, including brokerages and even banks. As mutual funds are typically made of many different securities, they are thought to be less risky than buying individual stocks.An IRA is an acronym for Individual Retirement Account. It is a type of tax-privileged account that is recognized by the Internal Revenue Service as a retirement vehicle. There are rules to what kinds of investments can be placed in IRAs, how much money can be placed in an IRA every year, how much of your contribution may be deducted for tax purposes, and rules for how and when you may withdraw money from your IRA.Now, IRAs may contain many different types of investments: stocks, bonds, CDs, even real estate or precious metals. Mutual funds may also be placed into an IRA.Another way to think about the two is like this: a mutual fund is a kind of investment in financial securities; an IRA is a kind of retirement account recognized by the IRS.