10 Reasons You Should Have A Roth IRA

When it comes to investing for retirement in the U.S, there are several plans that can be used to achieve this. The commonest are the employer-based defined contribution plans like the 401(k), 403(b), 457 or the TSP. For more details on these, check out this article here However, the Roth IRA which is not employer-based, can often be started by almost anyone in the US (you must be a legal resident and have earned income). I sincerely believe that this is the best retirement plan in this country and everybody should have one. Yes, everybody, including you reading this right now. If you have not opened one, it’s time to take action now. Sure, there are income limits to contributing directly to a Roth IRA, but if you are constrained by that, you can still contribute to it legally through the Backdoor Roth IRA strategy. Currently, the annual contribution limit to the Roth IRA is pegged at $5,500. By next year,

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Are You On FIRE?

    The truth is that a number of people have high-pressure jobs that they hate and would rather not go to work everyday, if at all they have to go. Some others prefer to work on their own terms. To yet a few others, they have passions that they want to pursue that may not necessarily bring much income. If you belong to one of those described above, then you need to hear about the term FIRE. The acronym simply means Financial Independence Retire Early. There is a whole new movement of FIRE enthusiasts, most common among millennials. When you think about retirement, most people usually think someone in their late 60’s and this is because this is the norm. The earliest you can start withdrawing from Social Security is age 62 and you can only start withdrawing from most tax-deferred retirement plans without penalty from age 59.5. Early retirement is the literal definition of the FIRE movement, but there’s a much more

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Mechanics of Investing: A Lazy Man’s Guide II

In the part I of this series, we discussed the common retirement accounts (baskets or open boxes, if you will) you can use to do your investing. In this part II, we’ll discuss the investments to put inside of those accounts. Wall street and some financial advisors make you believe that investing is complicated. Nothing can be further from the truth. Investing is simple if you follow a few basic principles: reduce your risk by widely diversifying your investments including a reasonable allocation between stocks and bonds (called a fancy term, Asset Allocation), maximize your returns by minimizing fees and expenses, and stick with your plan long enough to experience the magic of compounding. Like Jack Bogle said once, “Simplicity is the master key to investment success.” However even though investing is simple, it’s not easy. Why? Because it is mostly a behavioral exercise. It requires a lot of patience and contrarian behaviors. How Much Do I Invest? This is one of

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