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ROTH-IRA vs. Godzilla! (Quick Tip)

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If you are going to get into investing, the very first thing you should do is look into an IRA (look at the pros/cons of ROTH vs. traditional here).

Any online investment house can host your IRA, for free (well,  the account is free).

Why an IRA? Because it forces you to not spend what you save (or, at least gives you serious pause), while also giving you a tremendous tax advantage (while the money is within the IRA):

i.e., If you cue up all your big-gun dividend yielding stocks, and put them into your IRA, you don’t pay taxes on the dividends (whether or not you re-invest them: why this is important) … then you can buy non-dividend stocks* for your non-IRA investments and not pay taxes until you sell them [at which point you should have very little “income”, a.k.a., you’re retired, and won’t get taxed like a brain surgeon].

As one professional said, “Put your tax-adverse investments within your IRA, and put your tax-advantaged investments (e.g., US government bonds) outside of your IRA.”

Hustle! The faster you get your IRA up, the more you can contribute! Time is the main variable at work here!

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*Keep this in mind and be careful — in general companies that pay dividends do so because they are not reinvesting their money, whereas a company that is growing fast is probably not paying dividends (or, very little).

NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest