Helmin's Financial Tip of the Day

[fdh]

For all you teens getting in and around the age of working, here's something to consider:

 

Roth IRA

 

Invest in it! NOW. It's essentially an account setup for your personal savings/retirement. You can only put in money that's considered "earned income" or money you earned from a job. However, once you've put the money in, it and its interest is non-taxable. The max contribution per year at the moment, I believe, is ~5000. Start it early and build up a little nest of ~1-3 million dollars by the time you're in your early 50s. Since it is simply an account where you take your money and invest it in another form of long term hopes and dreams, you should keep up and tweak it about once a month or so. That can, with any luck at all, yield an extra 2-3 million. Just by tweaking as you go along. You can invest that money in cd's if you're super worried about losing a dime here or there. You can also invest it in some rock'n'roll stock with great risk and greater return. Then you get a job with a regular 401k. You build that nestegg up w/ small contributions at first, then healthy contributions in your later years. Remember, all money is eventually taxable when withdrawn from a 401k, at least on a standard basis but we won't get into that at this time. You can withdraw up to w/e you contributed into a Roth IRA at any point (leave the interest in there).

 

So let's say you're getting close to retirement and you start figuring up your expenses and etc. There is a way to "cheat" the IRS out of some taxes on the money that YOU put into YOUR 401k. And its legal! So here's how...

 

Keep in mind these numbers are just simplified for Helmin's Super Dee Duper Example

 

Okay lets say these are the following income tax brackets:

 

0-10k 10% tax

10k-40k 15% tax

40k-90k 25% tax

 

Now picture this...you're old like Clark, DJ, and Cantbefaded (some as old as Grizzly). You've paid off a good bit/all of your house. Your kids are paid for and living on their own. So you figure you only need about 60k to live comfortably for the rest of your days (maybe less, maybe more). Now how do you go about getting your 60k? Well...you can take it out of your 401k...but there's taxes:

 

10k is taxed at 10% = 1000

30k is taxed at 15% = 4500

20k is taxed at 25% = 5000

tax on 60k = $10,500

 

Thats the most common method. So you pulled 60k out of your 401k, and gave 10,500 to the gov't.

 

OR

TRY THIS

 

Lets say you listened to helmin's simple tip and tried to be a little smarter about your $... you actually paid attention to the tax bracket limits....

 

0-10k 10% tax

10k-40k 15% tax

40k-90k 25% tax

 

in this example I'm gonna focus on the 40k limit. So let's say I wanna take that 60k out again. Well since I was smart and invested a little bit every year into a Roth IRA, I'm going to use that as 401k support.

 

I take 40,000 out of my 401k. This lets me get taxed at 10% for the first 10k and then at 15% for the other 30k. That manes my tax will = 5,500.

Now for the other 20,000 that make up my 60,000...I pull it out of my Roth IRA now worth a few million after years of contributing on avg 3,000 per year. The best part is Roth IRAs are NOT TAXABLE. So I pay tax on 40 out of the 60 thousand $ that I take out... lets do a little comparison

 

 

all 401k for the 60,000: 10,500 in tax

40,000 in 401k and 20,000 in Roth IRA: 5,500 in tax

Saved: 5,000 + a bunch of money on my car insurance by switching to Geico.

 

 

I think I can use my 5,000 in a lot better fashion then the feds. Like donate it to HG

 

So redo the problem with some guesstimates and see how much cash you can save by going for a Roth IRA.

 

 

SO INVEST NOW. Even if congress decides one day that "hey, we're getting cheated out off too much tax $ nowadays via Roth IRAs, lets abolish them" all the contributions you already put in will be "grandfathered in" or kept as they are. And you'll continue to make contributions annually until the gov't says otherwise. So kids, take the time to put as little as 100 away in a Roth IRA.

 

 

*I'm not a financial guru and merely offering suggests on a video gaming forum

 

 

Make sure you read up on what you wanna invest in before diving into a Roth IRA. Also read up on the various regulations involved with Roth IRAs like income caps and etc.

 

 

Any questions?

[Wingless]

Other than I need to stop being lazy ind get back into investments. Still a little bitter about taking a 40% hit on my 401, and not wanting to shift funds since that will lock my loss.

[Venom!]

I didnt read any of that but I do feel smarter TY!

[John]

my second money talk today, me and van discussed credit scores

[Gracefail<3]

For all you teens getting in and around the age of working, here's something to consider:

 

Roth IRA

 

Invest in it! NOW. It's essentially an account setup for your personal savings/retirement. You can only put in money that's considered "earned income" or money you earned from a job. However, once you've put the money in, it and its interest is non-taxable. The max contribution per year at the moment, I believe, is ~5000. Start it early and build up a little nest of ~1-3 million dollars by the time you're in your early 50s. Since it is simply an account where you take your money and invest it in another form of long term hopes and dreams, you should keep up and tweak it about once a month or so. That can, with any luck at all, yield an extra 2-3 million. Just by tweaking as you go along. You can invest that money in cd's if you're super worried about losing a dime here or there. You can also invest it in some rock'n'roll stock with great risk and greater return. Then you get a job with a regular 401k. You build that nestegg up w/ small contributions at first, then healthy contributions in your later years. Remember, all money is eventually taxable when withdrawn from a 401k, at least on a standard basis but we won't get into that at this time. You can withdraw up to w/e you contributed into a Roth IRA at any point (leave the interest in there).

 

So let's say you're getting close to retirement and you start figuring up your expenses and etc. There is a way to "cheat" the IRS out of some taxes on the money that YOU put into YOUR 401k. And its legal! So here's how...

 

Keep in mind these numbers are just simplified for Helmin's Super Dee Duper Example

 

Okay lets say these are the following income tax brackets:

 

0-10k 10% tax

10k-40k 15% tax

40k-90k 25% tax

 

Now picture this...you're old like Clark, DJ, and Cantbefaded (some as old as Grizzly). You've paid off a good bit/all of your house. Your kids are paid for and living on their own. So you figure you only need about 60k to live comfortably for the rest of your days (maybe less, maybe more). Now how do you go about getting your 60k? Well...you can take it out of your 401k...but there's taxes:

 

10k is taxed at 10% = 1000

30k is taxed at 15% = 4500

20k is taxed at 25% = 5000

tax on 60k = $10,500

 

Thats the most common method. So you pulled 60k out of your 401k, and gave 10,500 to the gov't.

 

OR

TRY THIS

 

Lets say you listened to helmin's simple tip and tried to be a little smarter about your $... you actually paid attention to the tax bracket limits....

 

0-10k 10% tax

10k-40k 15% tax

40k-90k 25% tax

 

in this example I'm gonna focus on the 40k limit. So let's say I wanna take that 60k out again. Well since I was smart and invested a little bit every year into a Roth IRA, I'm going to use that as 401k support.

 

I take 40,000 out of my 401k. This lets me get taxed at 10% for the first 10k and then at 15% for the other 30k. That manes my tax will = 5,500.

Now for the other 20,000 that make up my 60,000...I pull it out of my Roth IRA now worth a few million after years of contributing on avg 3,000 per year. The best part is Roth IRAs are NOT TAXABLE. So I pay tax on 40 out of the 60 thousand $ that I take out... lets do a little comparison

 

 

all 401k for the 60,000: 10,500 in tax

40,000 in 401k and 20,000 in Roth IRA: 5,500 in tax

Saved: 5,000 + a bunch of money on my car insurance by switching to Geico.

 

 

I think I can use my 5,000 in a lot better fashion then the feds. Like donate it to HG

 

So redo the problem with some guesstimates and see how much cash you can save by going for a Roth IRA.

 

 

SO INVEST NOW. Even if congress decides one day that "hey, we're getting cheated out off too much tax $ nowadays via Roth IRAs, lets abolish them" all the contributions you already put in will be "grandfathered in" or kept as they are. And you'll continue to make contributions annually until the gov't says otherwise. So kids, take the time to put as little as 100 away in a Roth IRA.

 

 

*I'm not a financial guru and merely offering suggests on a video gaming forum

 

 

Make sure you read up on what you wanna invest in before diving into a Roth IRA. Also read up on the various regulations involved with Roth IRAs like income caps and etc.

 

 

Any questions?

 

Lulz. This is going on the Oprah forums. :dots:

[Weeman]

I made millions of dollars using this method!! true story!!!!

 

 

thanks fdhelmin!

[Moto]

"I'm Clark Howard... HLN."

 

I love that man! nohomo kthx!

[Patr!ck]

i stopped understanding when u said roth ira

[Ninja]

Thanks Fdhelmin i learned a little bit more than before now

[Moto]

i stopped understanding when u said roth ira

 

i heard that term before, actually (by Clark Howard..HLN) so I guess I am ahead of you??

[GRIZZLY]

roth lol

[GRIZZLY]

and old!

[Awolfpup]

The last time I heard it was $2,000 to start a Roth IRA..has it gone up to 5k...I too use to listen to clark howard AM 750 in atlanta til i moved down to macon.

 

Actually a 401k does have a few perks that were not mentioned above...

 

Yes, you get taxed if you take money out of your account before retirement age..however...you can withdraw money from a 401k for the following reasons early and not be taxed:

 

1. Financial hardship - Such as to stop a foreclosure on your home,

2. To make a down payment on your first primary residence[buying a home].

 

Benefits of a 401K:

1. Employer match [usually anywhere from 3-6% of an employee's contribution to the 401k plan];

2. Can take money out under a few conditons for hardship or purchase of a home without being taxed,

3. Can take money out at any time[of course with taxes being applied]

 

Roth IRA:

You have to contribute at least $2K a year minimum to keep it growing, no employer match as this is an individual retirement plan.

I'm not sure on the requirements, but I do not think you can take funds out at any time like you can with a 401k.

 

=====

The best part of the 401K, is that most of the time your employer will match your contribution up to a certain percentage. Always, Always, if you can, contribute the maximum amount that your employer is willing to match, that way you get the full benefit. This is free money you will be having saved towards your retirement as well in addition to your contribution.

[Guest The_Monkey]

Government pension + Diverse Stock Portfolio + IRA = WIN

[PitBull.]

sounds cool. all that typing. I'm sure there's a trick behind this and all this money somehow goes into helmins account. lol JK

 

sounds good tho. if I go through with it I will thank you in about 50 years lol

[RetiredTacos]

Too long, did not read.

[fdh]

The last time I heard it was $2,000 to start a Roth IRA..has it gone up to 5k...I too use to listen to clark howard AM 750 in atlanta til i moved down to macon.

 

Roth IRA:

You have to contribute at least $2K a year minimum to keep it growing, no employer match as this is an individual retirement plan.

I'm not sure on the requirements, but I do not think you can take funds out at any time like you can with a 401k.

 

 

False; False; True; False

 

 

The average minimum investment in a Roth IRA is $500. Usually the monthly contributions avg. b/n 100-200, however, there are ways of getting around a minimum investment (shop around; research). True, no employer matches your investment for a roth, but the bulk of your money comes from monthly adjustments to your investments. Go risky w/ rocknroll stock and make buck by the time you're 50, or play it mediocre w/ a balance of calculated risks and safety stocks. You'll yield a larger interest margin if you tweak it over the years. You can, at any time, withdraw any and all $ you have put into your Roth IRA, barring an unforseen fail move where you lose all your $. The interest is the only part behind the no touching glass. Also, minors can invest in Roth's as long as they are using earned income. Say you work after school at a grocery store and don't make enough to pay taxes on your YTD income. You can still use it towards a Roth. Banks also have appetizing investment plans for minors w/ minimal/zero fees and yearly contributions (stipulations provided of course). Parents should be aware, however, that when the kid turns 18 they can withdraw cash like nobody's business. Parents won't have a say-so.

[fdh]

s I'm sure there's a trick behind this and all this money somehow goes into helmins account.

 

You caught me. You can also donate to my cause with hefty sums of non-refundable deposits to my current foundation: Helmin's Skin Cancer Prevention Foundation. I go buy suntan lotion w/ the donations and then use the rest to build a shelter on my private island in the Caribbean.