Investing

Investing: Such an intimidating word, right?! IT does not have to be. If you’re funding a retirement account of any kind you are already investing. Let’s get beyond the intimidation of the word and simplify it. Retirement accounts are what most people will be focused on or something that is long term. If you are looking for a get rich quick solution or you have lots of extra cash for many other types of investing… like several shares of expensive individual stocks… You’re on the wrong site... 🙂 We are your basic working-class folks securing our futures in a world with most of us not getting a pension these days. That being said, we need to create our own retirement path vs the old days.

Employer retirement plans are the most common. These are the 401K’s, 403(b) for public employees, 457’s for government employees, ROTH 401K. Simple IRA’s, SEP Plans…. For a traditional *ROTH IRA, see note below. Bottom line there are several. The attached link will take you to the IRS web site for more details.

https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plans

*ROTH IRA is funded with after-tax dollars, BUT you must have a W-2 or 1099 stating you had EARNED income in that tax year. Max contribution under the age of 50 is $6,500. This money will grow TAX FREE with compound interest and will NOT be taxed when you take it out, BUT it must be held for 5 years.

If you are self-employed, you too have options, even a simple IRA account that you open with a Fidelity, Vanguard, Charles Swab., will allow you to LOWER your taxable income, AND that money will grow TAX-FREE with compound interest.

In basic terms, if you make $50,000 a year and you put $200 per month in a retirement account ($2400 per year) you are taxed on $46,500. The $2400 going in the fund will grow tax free with compound interest.

To give you the scope of the “SUPER -POWERS” OF THE COMPUND INTEREST...IF you open the retirement account with $2400 and contribute $200 per month for 30 years with an assumed 8% annual rate of return… Are you ready for this?!!!! You would have contributed $74,400 BUT your balance would be $296,030.08!!!! Greatest thing in the world, RIGHT!? It’s like a money machine!

Can you image if you add more than $200 per month as you get pay raises! As of 2023 An employee retirement plan does have a limit of what YOU can contribute, that’s $22.500 if you’re under the age of 50. If you are over the age of 50, its $30,000 per year. IF you have an employee match, aka FREE money, that does not go toward your contribution total that YOU contribute. IF you are self-employed, and are funding a traditional IRA, your limit is $6500 under age 50, $7500 over age 50. All traditional IRA accounts will be TAXED when you take the money out down the road… DO NOT touch it before age 59.5 years old! The goal is to START!!! Sign up with your employer and AUTOMATE the monthly contributions! IF your self-employed, set an appointment with a Fidelity or Vangaud or one of the other major investment companies. They will explain all the rules! Let’s start the money machine!!!

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