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  • This Could Be The Perfect ETF For A Roth IRA [View article]
    Absolutely, as long as it is an available option in your company's retirement plan. Whether or not it makes more financial sense for one to utilize the pre-tax traditional 401(k) or the after-tax Roth 401(k) is unique to each individual.
    Dec 3, 2013. 05:18 PM | Likes Like |Link to Comment
  • This Could Be The Perfect ETF For A Roth IRA [View article]
    Good article overall.

    A few things I'd like to add/reiterate:

    1. A Roth IRA is great for low-to-mid income earners due to the income limitations on the eligibility of contributions. As @six-oh pointed out, many people are not eligible to contribute due to their AGI levels. @R.Fitz pointed out a creative way to somewhat get around that. I have also talked to many people who took advantage of a Roth IRA Conversion, but I am not going to say whether or not that is a suitable decision.

    2. I would take full advantage of your company's 401(k) or other qualified pre-tax retirement accounts first. Maximize those contributions, and obviously if you can not, make sure to contribute enough to receive the full matching contribution from your employer, if applicable. i.e. if your company matches $0.25 on every dollar up to 10% of earnings, make sure you are contributing at least 10%. If not, you are leaving "free money" on the table.

    3. Disagree about the 10% annualized, and most importantly, sustained returns. If anything, when it comes to retirement planning, I'd be much more conservative in your estimates than that. I would be more comfortable using 7% or possibly even 8% in my assumptions versus 10%, especially if investing in an unmanaged, broad-based ETF. If you were an active stock trader or worked with a successful and proven money manager, you may be able to adjust your assumed future returns. I would still sway towards being more conservative when dealing with one's future retirement versus overestimating and ending up with a meek retirement picture.
    Nov 29, 2013. 04:25 PM | 3 Likes Like |Link to Comment