Roth IRA for Stock Pickers
A friend of ours invests in the stock market. He likes to pick his own stocks, and he does pretty well.
This guy has never opened an IRA; his argument is that an IRA would make him pay taxes at his normal tax rate when he draws the money out,
while his stock account will let him pay the much lower capital gains tax rate.
Actually this guy is wrong - he would always have been better off with a deductible IRA - although it might take a pretty smart fellow to see exactly why that is.
But with a Roth IRA, an idiot could see it: put $2000 into a regular stock account, take out whatever it's grown to when you're retired, and you pay capital gains tax.
Put the same $2000 into a Roth IRA, and when you take your money out you pay nothing.
It's like free money!
Roth IRAs are available through stock brokers, even the ultra-cheapie discount brokers that let you trade on the Web.
Also see the main article on Understanding the Roth IRA to explore the ins and outs of this type of account.
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