What The Heck Is an IRA?
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- Опубліковано 29 лип 2024
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What if there were a way to dodge taxes on a chunk of your paycheck? Or how about an investment opportunity that will never pay a penny of taxes on the growth no matter how big it gets? Sound too good to be true? This is the amazing tax shelter of the IRA.
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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.
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SOURCES:
en.wikipedia.org/wiki/Roth_IRA
www.irs.gov/.../retirement-pl....
www.investopedia.com/terms/s/...
www.irs.gov/retirement.../tra...
www.thestreet.com/.../401-k-a....
money.cnn.com/.../gallery.unu...
en.wikipedia.org/.../Individu....
dqydj.com/history-of-contribu...
thecollegeinvestor.com/.../ir...
Lots of you have asked "Can I fund a 401k AND an IRA?"
Yes, you certainly can, and many people do. By potentially maxing out an IRA and/or a 401(k) (or any other work-sponsored retirement plan) you can sock even more money away for retirement. Roth IRA's are subject to an income-limit phase out and Traditional IRA's can lose their deduction if you have a 401(k) and earn over a certain amount. But the short answer is -- if you CAN fund a Roth IRA and a 401k, go for it, you awesome save, you!
Want to check out your status and see if you can fund an IRA, 401k, or both? Here's a great resource from the IRS: www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
I asked a question can you please answer?
ROTH 401k and ROTH IRA possible? (I am planning to hit it big on the stock market and index funds)
If I have 2 IRA’s both with the same cap, say 6000$ a year, that means that I can put up until 6000$ in both IRA’s or I can put 6000$ in each ? That and can I for example own 2 Roth IRA’s or only on Roth IRA and IRA of a different kind. Thank you.
Hey.
UA-cam didn't show this to me despite being subscribed (with bell notification on)
This was just recommended to me just now by chance
In case you don’t understand what I’m talking about: en.m.wikipedia.org/wiki/Irish_Republican_Army
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@JacquelineTheresa That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@@NancyBetty-x My advisor is VICTORIA CARMEN SANTAELLA
Victoria Carmen Santaella , lookup with her name online.
@@MartinArthur-9000 The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. I retired with 5 million dollars
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?
Credits goes to " Sonya lee Mitchell" one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an email shortly.
Being Irish this hits different
oh yeah, I felt weird hearing IRA throughout the video, that’s why.
Yup.
Being british this blasts me away
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. Compounding is the process of earning interest on your initial investment, as well as on the interest that investment earns. This means that over time, your investment can grow exponentially. So the earlier you start investing, the more time your investment has to grow through compounding
@Margaret22- I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.
@@rickertcoles I actually subscribed for a few trading courses but it didn't help much, been getting suggestions to use a proper financial advisor, how did you go about touching base with your coach?
@@flemmingbrooke My advisor is NICOLE DESIREE SIMON , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
@@rickertcoles she actually appears to be well-read and educated. I just did a Google search for her name and found her webpage, I appreciate you sharing
I am currently running through my 40s and This is no time to taper retirement savings. I want to max out my retirement funding and I also have another $200k in a savings account that i want to invest in a non-retirement account.Would it be better going to housing? Maybe own property and let it till im ready to move in at 65.
Research dividend aristocrats and choose six to ten firms with over 25 years of dividend payments. Also consider working with an asset-manager to build a strong portfolio.
A good number of people do not invest in the stock market because of lack of guidance. Every year you don't invest, you are falling behind. I’m hitting numbers in the stock market I used to dream of… now my dreams are getting bigger. Going from ($50k to $600k) is surreal all thanks to insights from a professional.
I thought gains like that are nothing but a pipe dream! mind sharing details of yourmanager please?
She goes by ‘’.Sonya Lee Mitchell’ I say you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you! I entered her full name into my browser, and her website came out on top. I filled her form and i hope she gets back to me soon.
Can you guys do a video on “how to survive through the next financial crisis” or something along those lines?
Hmmm, that's a great idea! Adding it to the list!
I like this, great suggestion. I believe the recession has already started. Remember don’t look at the stock market prices, companies are just buying back there own stock to make it seem like they’re doing well. And that’s legal for them to do that.
Look at the small signs in your daily life, like stores closing or people you know who are struggling with credit card debt, auto loan debt etc.....
2cents, look at the economic reports from the legitimate source in Real estate, auto industry, building, etc... this could be a great video for your viewers to help them in preparing this early. 👍🏼👍🏼👍🏼
@@blakstorm12 While I agree that the stock isn't the best indicator to predict a recession, you're absolutely wrong about stock buybacks. Share prices increase after a stock buyback because the number of shares decrease since they were bought back... a stock buyback is just a way to give money back to shareholders just like dividends.
This is Barris! - French History I call stock manipulation on a massive scale.
Having no debt would be a good place to start.
Being from the UK but living in Ireland, an ‘IRA’ is something verrrrrrry different this side of the world
Haha I know right!
It’s like the KKK acronym for Filipinos
Certainly
I was cheerfully awaiting the Irish "IRA" reference. I'm glad I wasn't the only one that had those thoughts #saynotohardborders #IRA lol
Based potato lads
"What is an IRA?"
Me: pulls out ski mask, AK and a car bomb
sean hines lol
*AR-18
Are u trying to sell those
So true
@@thischannelisnowdefunct IRA members used both
A video next on offshore accounts in the cayman islands would be great though... for a friend of course.
Hehe
I need this too... it's for a friend too.
All of our friends are sacks of shit
The IRA is something very different where I'm from.....
Cough cough, troubles.
Ouch. Hello, Irishman
@@mandyberry2500 Haigh! conas ata tu?
@@nikhiljoshiPi yeah i think it might be use Irish or you guys
Starting now at age 33, but better late than never!🔥🔥🔥🔥
Quest to FIRE Same here
Same😬
Never too late hun :)
31 here
Me 2 😬
Can you make a “financial things to do when turning 18” ?
Love, it awesome idea Soy Saucey!
Starting an IRA is definitely one of em
Yee
LOL Someone's from the future.
Yes please! Or as a student!
Here’s a real-world example of the power of compound tax free interest: in 1986-1989 when I was in high school then starting college I was working minimum wage jobs (back then, $3.35/hr) and working part-time I earned about $2000/year, so each year my parents gave me a gift equal to the maximum IRA contribution I was allowed to make, as long as I deposited it into an IRA (Not surprisingly I spent most of my paychecks, so didn’t have much left over to invest myself, needed the gift from them).
So over those 4 years I deposited a little over $6800, but starting in 1992 I had a job with a 403(b) retirement plan, so I have made no further contributions to the IRA account since 1989. Today it’s worth almost $100,000, and I’m only 50, there is another 21 years of compound interest to accumulate. Thanks mom and dad!
I advise all my friends with kids who are working part time jobs, that assuming they don’t have other higher priorities (such as paying off credit card debt) that they gift their kids the maximum amount that can be put into an IRA and get that investment started as early as possible.
They should be teaching this in high school instead of nonsense subjects.
Fr
Unfortunately today, it seems that the only thing that IS taught is nonsense
My Spanish high school teacher taught us this.
He decided one day to stop teaching Spanish and spent the class to teach us about investments
For real. Very easy to include in math as a real life example! But TBH the idea of saving for retirement for high schoolers does not sound sexy 😟
Luckily, this was a required class at my HS, along with a government/civics class combo.
You've done an absolute top notch job on this. Very informative! I’m a dividend investor, my wife and I have invested in the s&p500, both through my TSP with the government and through fidelity in her 401-k. Cashed out 370k from the S&P and invested with a full service broker.. Until about 3years ago we were 100% in the s&p after over 30 years. I’m retiring at the end of the month at 59, while my wife will retire next year at 54. We currently have 5.7 million in out tex deferred savings.
Big win. Congrats to you and your wife .
Our Financial advisor is “ Donna Jean Boyette“. She is a professional financial/Investment advisor. you can search her up on the internet where you can get necessary info about her and as well to connect with her.
Awesome, but I think, I wouldn't know but, wouldn't it be better if you both retired at the same time
I see this exact same comment under some other video with a different account name.
Discussion unclear, ended up planting a fertilizer bomb in my neighbor's car
Two Cents: How to Retake the North.
As an Irish person this video title made me burst out laughing
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $300k, but I'm not sure how to go.
Currently, my primary worry is how to increase revenue during periods of quantitative easing. I cannot afford to witness my savings dwindle away.
That’s true, Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, , and in just a few months, I was able to earn over $950K in net profit from high dividend yielding stocks
My consultant is *Sharon Louise Count* She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision. I basically follow her trade pattern and haven’t regretted doing so
Considering your interest in investing more than $300k, you might want to explore Bridgestow as an option. They have demonstrated good returns, and their alliances with top investment companies add an extra layer of credibility. It could be a strategic move worth considering for your larger investment.
I've been in a similar position, looking to invest a substantial amount, and Bridgestow has worked out well for me. I'm currently waiting on my IRA to invest with them too because their returns are quite unique and promising. It might be a worthwhile choice for you as well, given your investment goals.@@DanielAdolf
It’s pretty different story in the north of ireland
opened a Roth IRA at 19 and although I have not been able to put a TON of money in it over time, this video made me feel better about your example of starting at 25. I still have 3 years till im that old. thank you !
It's still better to start early without maxing out than to not get started. I probably should have started some years earlier with 'pensioensparen', our version of IRA and not as interesting, but I got going in the end.
Is there a limit to how much you have to put in?
@@brendandonnelly3546 have to? You are only able to contribute 6000 a year under 55 I think , but I only put in a couple hundred a month for the first year or so
I had an IRA, but cloded it early with no penalty when I got sick enough to need a kidney transplant.
Raising the minimumwage Price's go up .so for those making Minimum wage just the same for those living off Savings . The money they saved Goes much faster. Causing infation gets no out of provorty but help the Democratic party because more vote democrate so the democrates can cause more infation
@@osmosisjones4912 - ithis is a complete non sequitor., and you'd know that id you had simply read the comment you replied to., nor are they particularly relevent to the subject of this video. Fo spout your own politics in your own comment, not as a response to mine.
This video becomes a lot funnier if you imagine they're talking about the other IRA.
Opened my first Roth a few months ago, at 21.
Awesome! Load that sucker up with mutual funds and monthly dividend paying REITs 😎
Where can I open a Roth IRA
Opened my Roth IRA last year at 26. Best decision ever! Thanks for covering this topic!
How much do you contribute monthly to it and will it make you a millionaire by the age of retirement? That sounds aggressive 😅 I don’t need actual numbers just general details about your experience. I’m gonna open one at the end of this summer but for obvious reasons my income isn’t gonna be where I can just freely put aside $500 (to meet the $6,000 yearly cap) for a couple of more years. It is not worth doing in you can’t through significant amounts of money to it? Should I just wait till I have a stable career and out of college and any debt?can u give any tips about how it’s going for you or what the process was like?
Leilani Dru the early you start the better even if it is a little. Compound interest makes time really important. You can make more money but you can’t get more time.
@@leilanidru7506 I've been maxing it out. So $500 a month. It's nice because technically you have until April of each year to max it out. So it's a bit easier.
L B yea but what’s the point of the earlier i start if I’m not gonna be putting much anyways:( like maybe $150 but nothing close to the max.
@@leilanidru7506 save anything is more important than maxing. Many people I know never get to the max.
Last time I invested in an IRA I got an AK47, a balaclava and a Liam Neeson accent.
You should never borrow of the IRA' they knee cap people who don't pay them back in time 😁
It’s time
AR-18
I think I’ll go start a Roth IRA now...
DO IIIITTT
Vanguard and purchase VTI.
it's too early, wait till you hit 40.
@@ninja.saywhat It's never to early.
tootsie|troll® are you stupid
I’ve had an IRA ever since Protestants moved into my neighborhood.
Taxation feels like a crime against me.
It is
Lol I'm from the uk and it's a very different and touchy subject from where I'm from🤣
A comrade on my left, and another one on my right...
A clip of ammunition for me little armalite!
Something we should all use cause no one is teaching us about them 😱
Right?!?!
Two Cents right.
What the heck is an IRA?
Gerry Adams: Am I a joke to you?
Oh my gosh thanks for this video ! I’m studying for the tax part of the CPA exam and I was kind of confused about IRAs this helped me understand it better!
I wonder how many Canadian's who watch this channel were confused why you were doing a show about "The troubles"
So this is group that all my Irish friends tell me about. Seems really cool.
Don't start your car
Whether a Roth or Traditional IRA is better for younger people has nothing to do with how "long" that younger person has to invest. You either get your income taxed on the frontend, or the backend. There are smaller technicalities such as the fact that a Roth has more flexibility on the age you must withdraw the money, as well as the fact that you can invest slightly more since the money is already after tax. But the #1 key to deciding which one to choose is: What income tax rate you think you will be in when you retire, compared to your current tax rate. Younger people who have just started working tend to be in lower tax rates, so it's better for them to use a Roth and pay taxes now, assuming their tax rates will be higher in retirement. The opposite is often true for workers in the prime of their career, and who expect to be in a lower income tax bracket when they retire.
The IRA stand for the “Irish republican army”.
Congrats! You won a free car! Please come claim it.
short answer: the greatest paramilitary organization to ever exist
Some would think that a trump supporter wouldn't agree with a (mostly) socialist paramilitary movement. But theres an exemption. The provisional IRA broke away from the original IRA due to the original's larger focus on socialism.
@@patriot1525 Wasn't it the other way around?
@@patriot1525 Tax Evader 76's PFP is the ANCAP flag, they're definitely not a Trump supporter. I doubt anyone who's not a statist would support him.
@@abigailsaoirsefinnegan bro i posted this 7 months ago they probably changed their pfp
For Canadian viewers, the Canadian equivalent is a TFSA (ou CÉLI pour les francophones). It was interesting to see the similarities and differences between the Canadian and American versions.
As usual, an excellent video. I look forward to your future productions.
Just curious what is different in the Canadian one?
@@cesarcastillo2511 We don't have the equivalent of a Roth and the max is $10,000 CDN. (It was higher, but Ottawa lowered the ceiling: Shortly after its introduction, some clever Canucks made a killing on the stock market with their TFSA, and, as you may know, the interest generated with a TSFA is... tax free!)
Wouldn’t the rrsp (reer) be the proper comparison?
What is IRA
Me: Gets AK47 And Ski Mask
I thought the video was called what the heck is the IRA (The Irish republican army)
This was definitely a big help! Thanks guys 🙏🏽
I just got my first official job, and I'm already planning to retire.
I'm 25 years old, so I think the Roth IRA may be the best IRA option because of compounding and I believe that my income would continue to grow as I continue with my career
Thought this was about Irish Rebels IRA means something different in Ireland "Irish Republican Army"
Up the Ra ^_^
2 cents teaching how to invest in the independence of Northern Ireland. Haha
I was also wondering why Two Cents had started talking about terrorism for a moment there. Mind you, multiple meanings does seem to be a fairly common problem when it comes to initialisms.
Erin go bragh
@@sohopedeco fairly sure it was the unification of northern ireland and the republic of ireland, not the independence of northern ireland
Yooooo
Thank you guys! This help me a lot!
You guys are so great! Thank you for your helpfulness!!!!
I'm turning 18 by the end of this year, this is definitely one of the financial goals I'm setting. ofc when I start making more than $550...
You made it sound so simple!
Julia, keep on with the opera singing!
Super helpful thanks
Sorry, I'm an irish viewer and I thought of the Irish Republican Army (IRA) straight away. Love the channel guys. Keep up the good work. Dan
Thank you for keeping it simple . Jesus those other UA-camrs explaining this made it so hard to understand. Thank You again! You just got a new subscriber!
I have constantly heard to start using an ira, 401k or some other kind of investment, as well as health insurance but they were never actually explained to me so I just ignored people or threw away the papers I got from jobs. I honestly never really thought about retiring because it didn't sound realistic to me so I never cared to learn about this stuff. You guys have been so incredibly helpful and I'm glad I learned this while I'm still in my early 20's 🙌
Yay! And yes, take Retirement SERIOUSLY NOW WHILE YOU CAN!!! It is a real thing. One day you won't want to earn that paycheck no mo!
Remember that with a traditional IRA you will be required to take distributions. Meaning that if you live beyond the average life expectancy, that account will run dry 🤷♂️
That's right! Also you never know about future tax rates so Roth eliminates that risk for the most part.
Chris Invests - Personal Finance Videos you are correct that there are required minimum distributions from traditional IRA accounts, but they are recalculated every year so without defining what is “average life expectancy” I’m skeptical that anyone with a well funded IRA, properly invested, who withdraws *no more than* the required minimum distribution (RMD) will see the account go to zero. My mom lived to 91, took only the RMD, and the last 8 years of her life (the time I was tracking her finances) the account had a *higher* balance every year, despite the RMDs.
Also don’t forget you are taxed at earned income rates on traditional IRA withdrawals. You don’t get the low capital gains tax rates.
@@jpe1 *Chris Invests* notion that Traditional IRAs run out before Roth IRAs *doesn't* *make* *a* *lick* *of* *sense!*
Al Rocky I was trying to be polite, but yes, you are correct, his position makes no sense.
This is a really informative video. For people who are just being introduced to investing for retirement, you could also do another video comparing 401(k) to IRAs. Keep up the great work, guys!
Thanks so much! Yes, that's something we've been kicking around!
Why am I watching this. I don't even live in America 😂
Thank you!
Americans: What the heck is an IRA?
Brits and Irish: uhhh
Well an IRA is a paramilitary formed in Ir-
I love this channel and can’t wait to see more videos
When I saw this I had to watch
The IRA is very different from where I’m from
Was looking for info on the terrorist organization but thank you.
you mean heroic liberation organization
So: if I put away $10,000 for retirement, it doesn't get taxed when I put it away. But when I go to take it out, it gets taxed as income, at the future, (doubtless higher) tax rate. I'm not seeing the real benefit here over say, buying tangible property for future resale (IE, gold or real estate). Definitely makes the Roth variation all the more appealing.
I came here for the IRA, not an IRA.
You got yourself a new subscriber. Loved it!!!
I’ve have subscribe to this channel like days ago! And I’m loving it, i just hope that you guys can create an app about your channel!
The only channel I trust for honesty and simplicity
All I can say is Thank You!!!!
How timely! I just did my first back door roth contribution today!
Wow thanks 🔥🔥🔥🔥
Great vid🔥💯 made things clearer
When you realize
You don't live in the U.S.
Same. But then you realize you live in Germany where you will recieve money from gorvernment anyway.
Same
@@lexifabricio1588
You get money from the US government too. But it's foolish to trust the government to take care of you....incredibly foolish
* laughs in freedom *
Then you realize your British and the IRA brings back troubles
i wish you guys made a full course for all these lessons in more details and how to s
Arman Yaseen That would be awesome!
I love your intro. As it consists all main goals of lives.
Could you also do an video on what a UVF is?
This is just like the Canadian RRSP and TFSA
Watching this even though I'm not an American. Just like to watch you guys 😊
The Roth IRA was enacted in 1997, I recall. I opened my Roth IRA account in 1998 with Janus with $2000, the limit at the time. Over the years, I contributed the maximum limits and saw them increase to $3000, then to $4000, then to $5000, and to $6000, and when I turned 50 I put in that extra $1000 and now I invest $7000 every year, and in the future will invest whatever the maximum will be. Janus is now Janus Henderson and the fund I invested in, Janus Twenty, is now the Janus Forty. Today I am 52 and that account is worth over a half a million.
Really?
Whats an IRA you say? GO ON HOME BRITISH SOLDIERS GO ON HOME
Very nice work my fellows
I think that your channel is one of the most reliable about the personal finance topic. I'm 17 and even if i will star University soon i want to educate my self as much as possible about personal finance because i think that is one of the most important things in the life of every citizen . But one question in which way the fact of living in another country dose affect the IRA even if I am a US citizen ( taxes, law ecc ) ?
Very educational Vids
This channel is fantastic. I only wish I'd known about this when I was younger! So much great advice offered here.
I wish we knew about these things sooner
This doesn’t sound related to the car bombs i know related to the IRA that I’m thinking about
Interesting video, good information guys👏👏
Please do one on life insurance! Love you guys
Can you make (or have you already made) a video about ETFs? I’ve read the explanations but I’m still having trouble wrapping my brain around the concept and distinguishing them from other types of investments that share some common ground with them. Thanks!
Wow. I think I might get one of these once I graduate college
Once slight correct with Roth IRAs is that you CAN withdraw anything that you put into it at anytime without a penalty (not that you should, but you have the option). You just can't take out any EARNINGS without a penalty. This also makes a ROTH very attractive for people who are a bit gun-shy about investing in retirement.
I clicked on this video thinking it was the Irish IRA but video was good anyway
Great content
I feel like I know way more about American economy, investment accounts and other financial stuff than about what's availabe in my country 😅.
Subscribed!
Do a video on the future of negative interest rates! Please thank you
Man, I would definitely sign up for Roth IRA after watching this video, right after I figure out what is making those strange beeping noises in my car. I hope it's nothing bad
2:31 this made me depressed for like a split second.
awesome Two Cents
Why is the British police outside my house