A Huge Opportunity Approacheshttp://www.fool.com/retirement/iras/2009/10/09/a-huge-opportunity-approaches.aspx Selena Maranjian
October 9, 2009
On countless occasions, I've lamented that if only I'd known in the past what I know now, I could have avoided a mistake, or made a better decision. The best way to avoid those situations is to learn everything you can all the time.
Anyone who wants a regret-free retirement should start reading up on Roth IRAs. You can plunk your post-tax dollars into a Roth IRA and invest them in what you wish. When you withdraw your money -- along with all the income it has produced -- you'll do so tax-free. That could add up to a lot of money, as these familiar stocks can show you:
Data: Yahoo! Finance, Motley Fool CAPS.
I don't mean to suggest that these companies will keep growing at these rates – but they do show you what kind of growth is possible, if you choose well. Imagine a $10,000 initial investment in Nike; over the past two decades, it would have grown to nearly $220,000. In a regular brokerage account, that $210,000 gain would be taxable, costing most of us 15% or $31,500. (Remember that tax rates may well go up in coming years to pay for our economic recovery -- a 20% tax hit on that sum would be $42,000.)
In a Roth IRA, though, if you follow the rules, you'll likely be able to take out the entire $220,000 tax-free. This is a powerful kind of retirement savings. Imagine hitting retirement with a $1 million Roth IRA account and a $1 million 401(k). Withdrawals from the 401(k) will likely be taxed at your ordinary income rate, which might be around 25%. If so, you could see a $250,000 tax hit. In the Roth, you'd get $250,000 more in your pocket.
A huge opportunity approaches
Here's a huge Roth fact that you may need to know, and