Work Your Buck!

Posted by ECOKID on Jul 6th, 2009 | no comments home title

Hello everyone!

Let me start off by saying that I wish you all had a great 4th of July weekend. As for me it was entirely too much fun and hence why post didn’t show up for the weekend. Needless to say, I’m back and I’ve got some encouraging things to say to those that have gotten this far in the Financial Freedom Plan.

In today’s post and in the posts to follow, we will be exploring some very interesting investment methods that will allow you to work your buck! Now, the idea here is to get things going in the direction where money starts working hard for you insted of you working hard for the money. Today’s post will cover general information regarding one of the Investment Retirement Account(s) (IRA) that are worth looking into. The different types of IRA’s are as follow:

Roth IRA
Traditional IRA
SEP IRA

Roth IRA Information:

Investment Retirement Accounts are accounts that are generally great for individuals looking for alternate ways of investing money due to the decline of offered pension plans to employees these days. They are accounts that allow for tax advantages for retirement savings in the United States. Lets go ahead and look into one of these types of accounts in more detail.

In Roth IRAs contributions are made with after-tax funds. All earnings from transactions made within this type of IRA are made tax-free. Withdrawals from this type of account are usually tax-free considering you may not start to withdraw funds until you’ve reached retirement. Unless there is a specific exception stated by law, funds can be withdrawn from this IRA account (penalty free) as taxable income once the account holder reaches a specific age.

Bellow is some information regarding funding:

In 2005, if you are under 49 years of age, your contributions are limited to $4,000 per year. Over 50 and you can invest up to $4500.

In 2006 and 2007, if you are under the age of 49, your contribution limit will be $4000, but if you are over 50, your limit will increase to $5000.

In 2008, limits change for both those age groups. Under age 49 will increase to $5000 while over age 50 will increase to $6000.

All in all, a Roth IRA is an perfect choice for a retirement account. Its main benefits are the taxation structures that are imposed and the minimal fees that are imposed in case one were to withdraw funds early, before reaching the retirement age.

For all practical purposes this is my favorit IRA. I’ll dive into informing you of the other retirement account types on the following post.