A Roth IRA is one of the most powerful tools you can use to become extremely wealthy. But there are so many misconceptions about them that keeps many from taking advantage.
Let me clear up the confusion around Roth IRAs:
1) You can’t touch any money in a Roth until you’re 59.5 years old
This isn’t true at all.
You can actually withdraw any of the money you’ve contributed with no penalty.
Only the gains from dividends or appreciation are off limits until 59.5
2) Roth IRAs are only for retirement
Another common misconception.
But you’re actually eligible to withdraw up to $10k without penalty for a down payment on a home
(Also as stated before, contributions are always accessible)
3) You can’t contribute to a Roth IRA if you make too much money
While this is true, there’s a way around it.
If you file taxes single and make $138k+ or jointly and make $218k+ then you can’t directly contribute to a Roth.
But you can contribute to an IRA and convert it later
4) Anyone with a traditional IRA can convert it to a Roth
This is true!
Converting to a Roth could potentially save you A LOT of money on future taxes.
There are no limits to how much you can convert and no penalty for converting.
However, inherited IRAs cannot be converted.
5) A Roth IRA is an investment
No.
A Roth IRA is just a type of investing account.
Not an actual investment.
You still have to pick your investments separately inside of the account for your money to actually grow.
(You can invest in stocks, index funds, ETFs, etc.)
As of right now, you can contribute up to $6500 per year to a Roth IRA ($7500 for those age 50 and older)
But there’s a reason they put a cap on the amount you can contribute.
The tax-free wealth-building potential of Roths are so powerful that a limit had to be made.
When you invest through a Roth IRA, you’re letting your investments compound (likely for decades) into a huge portfolio meant to help pay you throughout retirement.
But the true power of a Roth?
All the gains seen in your account will be accessible to you TAX FREE!
That’s what makes this account my personal favorite to invest in.
Not paying any taxes on future income sounds like a great deal to me!
Investment advice offered through Stratos Wealth Advisors, LLC, a Registered Investment Advisor. Stratos Wealth Advisors, LLC and Flagship Financial Advisors are separate entities. Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Flagship Financial Advisors, or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Flagship Financial Advisors.