How Do I Move to a Roth?

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[alexsteven.m]

I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement in 3 years.

[NicholasBall]

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

[garrickphillips-xz]

I’m 32 years old and I am just starting to invest for the first time in my life. I have started contributing to my 401K and opened a Roth IRA with automatic contributions. My question is, does asset allocation even matter early on, or am I just overthinking this?

[ranger-iodb]

This is some good information. I should have been listening to Dave 20 years ago.

[gerald]

when moving from traditional to roth make sure the amount you make taxable doesnt take you over the amount that makes your medicare cost rise.

[stephenparallox]

Although the explanation of a Roth vs. Traditional was spot on, at 60 you do NOT want to overload on growth stocks for a large return. You have to adjust your allocation so you can have funds on hand if you need it at 60, otherwise a bad market turn and you're going to be broke late in life.

[zane]

Simple:
1- Max out your company match -if any- on 401k, or participate in pension plan -if offered-.
2- Max out your Roth IRA of $6, 000 a year (as of 2019), unless you make more than 120, 000 a year (as a single).
3- Max out 401K Roth if offered by employer.

Notes:
A: Open Roth IRA with TdAmeritrade, Etrade.. etc and put at least a dollar. you have a 5 years timer that starts when you 1st contribute.
B: If employer offers borrowing from 401K and you cannot afford maxing out your $6, 000 a year Roth IRA, you can borrow from your 401k if you can afford it.
C: Other than wine and old collectibles, is the only thing you can do to make time work on your side.

[stewdog]

I didn’t have any friends until I met Roth.

Now I have 569, 961 friends. Plus Roth; Roth and I are still friends too.

[juju]

Translation
Growth: could be medium or large cap companies that are expected to grow
Growth and Income: dividend and/or dividend appreciation funds (typically large cap)
Aggressive growth: small cap stocks.
International: self explanatory...even though most American large cap stocks have a lot of international exposure these days.

[Corey_Bee]

He needs to recalculate the return using the $60k that goes into the Roth. He's using the $200k he calculated based on having $90k invested. The conclusion is not necessarily wrong, but the reasoning is misleading.

[ligbzd]

In a 10 year period, remember there is always a potential for a recession or economic slowdown. So, don't count on your money to grow every year. There will be years that your money may go down 40% or more. That's the risk.

[vjadhav]

Those two make 200k in a year but can't cash flow 30k at any one time??? where do you find these people?

[alrocky]

He doesn't ask the important questions up front like what is the traditional IRA invested in, age and her tax bracket. She likely doesn't benefit from an traditional IRA to Roth IRA conversion.

@ 1:30"... get...returns like what the stock market does..." - yet he doesn't bother to suggest she simply invest in an S&P 500 or Total US Stock Market mutual fund. That is better than his tired and obsolete offering 5 seconds earlier.

[johnchafin]

She still had no clue what was being talked about... LOL

[Dr.TJ]

I never really thought about the contributions to a traditional IRA as just deferring the tax, but that’s what it is. I realize the theory is you need less in retirement and therefore should be in a lower tax bracket when you withdraw it so overall you’re paying less tax. I think the Roth is a much better retirement vehicle not just because it grows tax free, but because you don’t have to take withdrawals at 70 and you can turn it over to your kids tax free when you die.

[brandonkirk]

Dave cracks me up! He uses general basic advice and applies it to everyone regardless of their situation. Everyone’s situation is completely different and he gathers minimal information about the person/family to make a decision that is not specific to that individual/family. And people listen!

[laminjawo]

I have to replay this two times to absorb the information.

[johnquinn]

Great Information!! Have done this a couple times over the years.

[cooper]

If you are retired making 200k a year through pension why do you even need to worry about how you invest?

[merriem]

I’m in the process of doing the same thing and the taxes you have to pay upfront is also my dilemma.