Lady Luck

sailfishJanuary 18, 2005

My three month trial in the trading arena has brought me 20%. Looks like I'll be handing over some loot the the goverment come April. Should Lady Luck continue to grace her presence through 05 I'll have to do the same again. Is there anyway to tax defer a precentage of the earnings? I dont have an IRA or 401k.. Should I start one of these? Any other ideas? TIA

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chelone

You should most definitely have an IRA! and if you fall within the income guidelines I would urge you to set up a ROTH IRA. These are funded with income that's already been taxed and so, will grow and be available to you TAX FREE. The allowable contribution is 4K for 2005 ($4500 if you're over 50 and take advantage of the "geezer provision"). If you prefer, you can contribute to a regular IRA (same amounts) and take a deduction on your taxes... but you will be taxed on the withdrawals required when you attain retirement age.

There are other benefits to ROTHS, I suggest you search and read all about them. If you use an accountant he will be able to suggest other things you can do to salt away money for your retirement. But don't wait to do this! it's easy to do and you will be amazed at how the money will begin to accumulate and begin compounding... and compounding is the key to really savvy investing and saving!

    Bookmark   January 19, 2005 at 5:47AM
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