Here’s a topic that’s been coming up a LOT recently, and this is an extremely confusing decision: What’s better to invest in - Roth IRA or a Traditional 401k? Here’s my thoughts, enjoy! Add me on Instagram: GPStephan
LIMITED TIME: Get 2 FREE STOCKS ON WEBULL when you deposit $100 (Valued up to $1850): https://act.webull.com/k/Vowbik9Tm5he/main
Roth IRA vs 401K Calculator: https://www.bankrate.com/calculators/retirement/401-k-or-roth-ira-calculator.aspx
GET $50 OFF FOR A LIMITED TIME WITH COUPON CODE: THANKYOU50
The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $125 million in sales: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
So lets first start with some background on the almighty Roth IRA:
First, like I just mentioned, all of the profit generated in this account is tax free after the age of 59.5. That could save you a LOT of money by the time you retire, especially if you begin investing in this early on.
Second, with a Roth IRA, you can withdraw whatever money you contribute to this account, at any time, tax free, without paying any penalties.
However, here are the downsides:
First, with a Roth IRA, you contribute POST TAX MONEY - this means the money that’s left over after you’ve already your paid taxes on it. And as we all know, the money you have left over AFTER taxes is a LOT smaller than before the taxes were taken away…this means you’ll have LESS of your money to invest upfront, all things considered.
Second, if you want to withdraw your PROFIT from this account before the age of 59.5, you’ll be subject to a 10% penalty, and you’ll have to pay normal taxes on that profit.
Third, the contribution limit for a Roth IRA is capped at $6000…so if you want to contribute more than this, well, you can’t.
But how does this all compare to the Traditional 401k?
Well, the 401k is an employer sponsored retirement account where you contribute PRE TAX money…meaning you won’t pay any taxes on the money you invest in this account. Now because you don’t have to pay taxes on the money you contribute, you have even MORE money left over to invest instead of paying it to the IRS, allowing that extra money you saved in taxes to make YOU even more money.
Pros of a Traditional 401k:
You contribute pre-tax money, meaning you don’t pay taxes on the money you put in this account, and can be a huge tax deduction.
Secondly, you can contribute up to $19,000 per year in a 401k…that’s more than 3x HIGHER than you can contribute to a Roth IRA.
Third, some employers offer a 401k employer match - which means they actually match your contribution, dollar for dollar
Downsides to the traditional 401k:
The first is that you’ll end up paying taxes on your money when you begin withdrawing it from your account after the age of 59.5. With a 401k, you’re basically saving money on taxes NOW so you have more to invest upfront.
Secondly, if you want to withdraw the money prior to the age of 59.5 for anything other than financial hardship, you’ll be subject to paying a 10% penalty on your money and you’ll owe taxes as though this money is ORDINARY INCOME.
Third, you’ll be forced to begin withdrawing your money at the age of 70 1/2…and for some people who prefer to continue saving it and letting it grow, well…you can’t.
And the right mix is - in my opinion - a slight balance between the two. I still contribute a bit to my traditional 401k just to hedge my future options, even if I have no idea if it’ll be the smart choice in the future…again, JUST IN CASE. I also go heavy on the Roth option, too, because I know it’ll be tax free in the future, and I don’t have to question what future tax rates may or may not be.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
LIMITED TIME: Get 2 FREE STOCKS ON WEBULL when you deposit $100 (Valued up to $1850): https://act.webull.com/k/Vowbik9Tm5he/main
Roth IRA vs 401K Calculator: https://www.bankrate.com/calculators/retirement/401-k-or-roth-ira-calculator.aspx
GET $50 OFF FOR A LIMITED TIME WITH COUPON CODE: THANKYOU50
The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $125 million in sales: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
So lets first start with some background on the almighty Roth IRA:
First, like I just mentioned, all of the profit generated in this account is tax free after the age of 59.5. That could save you a LOT of money by the time you retire, especially if you begin investing in this early on.
Second, with a Roth IRA, you can withdraw whatever money you contribute to this account, at any time, tax free, without paying any penalties.
However, here are the downsides:
First, with a Roth IRA, you contribute POST TAX MONEY - this means the money that’s left over after you’ve already your paid taxes on it. And as we all know, the money you have left over AFTER taxes is a LOT smaller than before the taxes were taken away…this means you’ll have LESS of your money to invest upfront, all things considered.
Second, if you want to withdraw your PROFIT from this account before the age of 59.5, you’ll be subject to a 10% penalty, and you’ll have to pay normal taxes on that profit.
Third, the contribution limit for a Roth IRA is capped at $6000…so if you want to contribute more than this, well, you can’t.
But how does this all compare to the Traditional 401k?
Well, the 401k is an employer sponsored retirement account where you contribute PRE TAX money…meaning you won’t pay any taxes on the money you invest in this account. Now because you don’t have to pay taxes on the money you contribute, you have even MORE money left over to invest instead of paying it to the IRS, allowing that extra money you saved in taxes to make YOU even more money.
Pros of a Traditional 401k:
You contribute pre-tax money, meaning you don’t pay taxes on the money you put in this account, and can be a huge tax deduction.
Secondly, you can contribute up to $19,000 per year in a 401k…that’s more than 3x HIGHER than you can contribute to a Roth IRA.
Third, some employers offer a 401k employer match - which means they actually match your contribution, dollar for dollar
Downsides to the traditional 401k:
The first is that you’ll end up paying taxes on your money when you begin withdrawing it from your account after the age of 59.5. With a 401k, you’re basically saving money on taxes NOW so you have more to invest upfront.
Secondly, if you want to withdraw the money prior to the age of 59.5 for anything other than financial hardship, you’ll be subject to paying a 10% penalty on your money and you’ll owe taxes as though this money is ORDINARY INCOME.
Third, you’ll be forced to begin withdrawing your money at the age of 70 1/2…and for some people who prefer to continue saving it and letting it grow, well…you can’t.
And the right mix is - in my opinion - a slight balance between the two. I still contribute a bit to my traditional 401k just to hedge my future options, even if I have no idea if it’ll be the smart choice in the future…again, JUST IN CASE. I also go heavy on the Roth option, too, because I know it’ll be tax free in the future, and I don’t have to question what future tax rates may or may not be.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
Good information
Make a video on how we can learn how you did so i can stop watching. No offense papa graham
The correct answer is both
As a soon-to-be retiree, keeping my 401k on track after a bumpy 2022 is a high goal. I've read about investors generating up to $250k ROI in this present sinking market; any suggestions for increasing my ROI before retirement would be greatly appreciated.
I always tell my clients this. Would you rather be taxed when you plant the seed? Or when you reap the harvest?
Choosing a Roth IRA is advantageous as it uses after-tax funds and allows tax-free growth. When I retired, I had $3M million saved, and I won't be taxed on my withdrawals.
A signature stamp or medallion stamp? Read it for yourselves.
Probably related to Bernie Sanders, Barry Sanders of the DetwöïT Lions 🦁, etc.
Max out your 401(k)
Rent prices. You need money for rent and food. Roommate or marriage
Partnerships
Married filing jointly or ?? Separately 😉
Taxes are for certain
I recently inherited almost $500k. I REALLY need to make this money work for me, and not just disappear over time. All roads have pointed to the equity market of some sort which is a good idea buh where else should I put money besides the equity/stock market?
Is it even worth it if I can only put 40-50 in every week
My 401k administration costs is 0.58% to hold my money in an index fund. That is not including the expense ratio of the index fund. Complete rip-off
I came here for a Roth 401 K vs Roth IRA comparison… what a shame.
How do I know which tax bracket I’m in ? Financial Newbie
The problem with 401k is what if the government decides to significantly raise capital gains taxes in the future? There's already been a lot of talk about increasing taxes on investments and this could potentially undermine the 401k after tax value. RothIRA is guaranteed tax free, acting as a hedge against tax increases
Max 401K $22.5K
Max Roth IRA $$6,500
Total = $29K
Goal = $290K income for 10% Retirement portfolio
Are you trying to build your income and prepare for retirement? It’s important to choose stocks that are expected to hold up in inflationary environments. To combat the negative effect of inflation, it’s a good idea to diversify your portfolio across different asset classes, such as stocks, bonds, and real estate. I've been using the services of a verifiable financial advisor Christy Val D'souza . I started with $140k, with her assistance I've have made more than $700k. You too can do same.
Actually it's not that difficult of a decision. If you are an active trader (and will continue to be active) the Roth is undoubtedly superior. Starting early enough some securities can appreciate 100, 200% or more and that profit is then tax free and can be reinvested.
Retirement timing and choice determines a lot in one's life. Investing before retirement comes, is another. My parents spent years working full time jobs, but my mom was investing through a financial manager while my dad did his by himself. My mom retired with over $6.5 million, whereas my dad retired with less than $500k. It is your choice on how you invest. As for me, I invest with my financial manager Robin Brezik , and I have never regretted it, as my portfolio keeps increasing.
I hate the irs
I find myself at a crossroads, uncertain whether to liquidate my $150,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current market.
Taking early notes from Warren as to the importance of sound asset diversification and risk management It can’t be overstated. I’ve been trying to grow my portfolio of $300K for sometime now, I would greatly appreciate any other suggestions.
What about having both?
This is a somewhat misleading comparison as it suggests to have a roth retirement account you must have an IRA and for pretax you must have a 401(k). Many 401(k) plans offer a roth contribution option while there are also traditional IRAs. A better comparison would have been IRA vs employer sponsored retirement plans (not all are 401(k)) or roth vs traditional contributions.
Becoming a millionaire through a Roth IRA or a 401(k) involves different strategies for maximizing profits. A Roth IRA offers tax-free withdrawals in retirement, which can be advantageous if you expect to be in a higher tax bracket later in life. On the other hand, a 401(k) provides tax-deferred growth and potential employer contributions, boosting your savings. The optimal choice depends on factors like your current and future tax situation, employer match, and investment options. Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
Great video! The 401k is good for some persons, because retirement choice determines a lot in ones life. My parents spent same number of years working a full time job, but my mom was investing through a financial manager while my dad through the 401k. My mom retired with over $6.5 million, whereas my dad retired with little close to $3 million. It is your choice on what to invest. As for me I invest with my financial manager Robin Brezik , and I have never regretted it, as my portfolios keep increasing.
With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.
My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k. My mom retired with about 4.2 million, but my dad retired with roughly 1.8 million.
A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can take advantage of compound interest and potentially grow your retirement savings to about $3M over time?
Taxes – earning less and owing more
I've bought most of your stocks picks but I'm still unable to make profit. However, a few investors I read about were able to make profits of upto $50,000 monthly, so am I doing something erroneous? please i need some hints on how to make enormous profit
The financial system has been artificially pumped for over a decade to ensure big pockets were lined; and now those same hands will make a fortune in the largest transfer of wealth in human history by shorting it on the way down. Inflation does have a roll, but that's to keep everyone panicked, and focused on their bills and expenses, rather than focus on the capital crimes of politicians and corporations,I'm still at a crossroads deciding if to liquidate my $338k stock portfolio, what’s the best way to take advantage of this bear market??
if im making Gross $110-120k a year would I benefit more if I increase my 401k to 15%? I am currently at 10%.
My employer dont match our 401k