Roth IRA Investing: Helping You Laugh at Money Worries by Nicanor Castillo

Roth IRA Investing: Helping You Laugh at Money Worries

by Nicanor Castillo

Let's face it. The financial situation that our country currently finds itself in is no laughing matter. But are you aware that long before the government set out to try to put smiles back on Wall Street, it set up a great way to help YOU laugh at money worries with Roth IRA investing?

It's true. The programs established by the government for investing IRA money are truly financial bonanzas for those persons wanting to safely and effectively build wealth for the future. And with the generous tax savings options that come with these programs a person can truly laugh all the way to the bank.

Roth IRA investing is no different that traditional IRA investing. But I'll get to that in a moment. However, the main difference between the two savings plans are the tax savings options. If you choose to open a traditional IRA, your tax benefit is taken in the year you open the savings plan. You are allowed to deduct up to $5000*, the maximum contribution for 2008**, from your taxable income. Every subsequent year that you contribute to the IRA, you are allowed to take it as a deduction. Any earnings you make from your investments remain tax deferred until you withdraw them, along with your contributions, at retirement. At that time, applicable taxes will be owed. In contrast, opening and maintaining a Roth IRA involves the use of money that has already been taxed. As with a traditional IRA, the $5000 maximum contribution cap still applies, but in this case, the earnings you make investing IRA funds remain tax free. When you withdraw your money (contributions AND earnings) at retirement, NO taxes will be due.

So what about Roth IRA investing? If you're thinking that investing IRA funds in the unstable stock market is your only option, then think again. Most people that open IRAs don't realize the vast choice of investment opportunities available to them, including mortgages, franchises, tax liens, partnerships, and private equity, to name a few. Many people think they are not smart enough to make investing decisions. There are others who don't want to be bothered with the paperwork. Financial institutions play upon these uncertainties because they make their money from charging management fees and earning profits from selling in-house investments.

There is nothing wrong with allowing a financial institution to manage your investments. Many people are happy with an annual 8% return. But when there is an opportunity to save those fees and earn those profits yourself by managing your own IRA, why wouldn't you?

The truth of the matter is that self directed Roth IRA investing gives you the opportunity to hold a vast array of assets, including real estate, that can easily double or triple your initial investment. And remember, Roth IRA investing profits are tax free.

If you're still unsure about investing IRA money yourself, you'll be happy to know that there are companies that specialize in setting up self managed IRAs. Not only do they follow your investing instructions, but they take care of the hassle of the paperwork. This includes generating the required reports, and making sure your IRA is in compliance. In my opinion, this truly is the best of both worlds.

Make no mistake about it. Roth IRA investing is one of the easiest ways to save and earn money while getting a great tax break. If you are one of the smart people investing IRA money then it won't be long before you, too, are laughing at money worries.