Why Should I Choose A Roth 401(k) Over Traditional?

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[NicholasBall]

Biggest financial mistake I ever made was with my 401k. My company had a Roth 401k when my kids were in college, but I didn't actually start contributing until year 3 of the 6 years I had kids in college. Because I was helping them with expenses, I was entitled to the tax credits, so my effective tax rate was extremely low. That is the time you NEED to be in a roth! i still retired with about $350k in my 401k.

[Ingridlourd]

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274, 800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

[susannnico]

This is financial advice and I never give financial advice: DONT LEAVE DURING THE BEAR. If you don’t want to invest…learn. If you don’t want to learn…build. If you don’t want to build observe. DO SOMETHING…other than leave. There is so much opportunity here. Take advantage!

[ComfortB-ut]

I have two pensions. I would much rather have had a Roth 401k throughout my working lifetime. $500/month invested from 25 - 65 at 9% is $2.3mil. I have $100k that i like to invest in a non-retirement account, Where would you invest this as of now?

[elmond]

I would like to take a moment to appreciate how polite and respectful Fernando from Texas is.

[EthanRaynolds]

While your 401k and IRA account would likely continue to grow even after you stop contributing to it, that growth might be limited by the Market, your personal plans and also other factors. For this I see need for annuities. I still will like to know how to compound $2m and above in retirement without holding cash.

[njwilson]

So he accounts for the taxes taken out at retirement for traditional 401k but completely disregards the taxes being taken out each week funding a Roth 401k. Of course a Roth sounds better if you use that extreme over simplification.

[ConradGosling]

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 one take advantage of compound interest and potentially grow your retirement savings/net-worth to about $3M over time?

[elaineschultz]

My biggest mistake was procrastinating and not starting one as soon as I was eligible. It's really not that hard to open an account and manage yourself. And you can also have your brokerage manage it for you. If you're reading this, start now.

[Jpsantos]

I just turned 29, and I currently have $18, 800 in my Roth 401k and $12, 500 in my Roth IRA. Starting off slow but can't wait to see the compounding.

[graywilliams_.]

investment requires good experience and knowledge to carry out a good and successful trade, I have lost a lot trying to trade all by myself May I ask which investments are good? I've been looking at a few different ones but want others' opinions as well.

[NormanGhali]

I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.

[rymn]

I converted to a Roth 401k. I plan on living off my dividends tax-free. People are way too comfortable with low taxes & low interest rates today. Trump's tax cut expires in 2025. Fed's low interest rates has skyrocketed debt all across the board. Social security is heading for insolvency. Country is 22 trillion in debt. TAXES WILL GO UP IN THE FUTURE ! When you withdraw income from your retirement accounts, you will be taxed by the IRS unless you have a ROTH. So pay low taxes now or pay high taxes later ? No disrespect but I think those people are delusional if they believe taxes will not go up in the future

[esonon]

I wish he asked him his income. Roth is better if you aren't in a high income tax bracket and 401k is better if you're trying to lower your taxable income.

[Barweezy]

Schools: What would you like to study this year?
Students: How about some basic financial literacy?
Schools: Perfect! Please open your textbooks to Chapter 8 on parallelograms!

[modap]

He totally ignores the taxes paid before contributing to the Roth.

[strongblackliquor]

Something else to consider is that you're going to be taxed on the money regardless. Either now or during retirement. If you expect you'll retire into a lower tax bracket, the Roth may not be the best choice.

[IlliniPicker]

That GROWTH tax-free is absolutely a GAME-CHANGER.

[jordanumphress]

the only mathematical difference between the Roth and Traditional is the expected tax rate. if you think taxes will be higher in the future you should pay now and use roth IRA. if you think tax rates will decrease in the future you would be better off waiting to pay and pay when you pull the money out of the traditional. Dave's example is a bit disingenuous as he is framing it as if it's as simple as saying do you want 400K more or less. The honest reality is if you make 100K a year with 20% tax rate and contributing 10%. using arbitrary numbers for easy math. If you put the 10% into a traditional you put 10K in and are taxed on only 90K income, thus paying 18, 000 in taxes leaving you with 72K after tax income. If you contribute to 10% to a roth IRA its after taxes. so you will be taxed on 100K income, pay taxes of 20K and have after tax income of 80K. but then 10% of that is 8K contribution. leaving you with the same 72K disposable income. but you only contributed 8K on an after tax basis. not 10K in the traditional IRA example. technically for Daves example to be accurate of getting this after tax higher amount he discussed. you would have to contribute the same 10K as you would in the traditional example; however your left with less disposable income every year of 70K. *** there are also roth IRA limits that come into play as well. but the true kicker is that if your putting the same nominal amount to each and investing it in the same assets mathematically there is not any difference unless the tax rates change over time. if you think taxes will be higher in the future go with roth. if you think taxes will be lower in the future stick with traditional. Currently tax rates are near historical lows for context.

[MiikeFaber]

Planning retirement has never been this confusing! First SVB, then Signature bank and now First republic, these are all the signs of yet another 2008 market crash and recession 2.0, so my question is do I still save in the United States dollar, or could this be a good time to buy stocks? So I’m left wondering what 2023 has in store for us investors, I’ve been sitting on over $745K equity from a home sale and I’m not sure where to go from here,