Roth IRA: How to be a TAX FREE MILLIONAIRE with $12 PER DAY
Hereâs EXACTLY how you can become a Tax Free Millionaire by opening up and investing within a Roth IRA in 2019 - Enjoy! Add me on Instagram: GPStephan
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A Roth IRA just stands for Individual Retirement Account. Think of it this wayâŠjust like you have a bank account where you have access to a savings and checking account, you can open up a Roth IRA account and have access to your INVESTMENTS.
And hereâs how the Roth IRA works:
Youâre able to open up one of these accounts and deposit up to $6000 PER YEAR if youâre under the age of 50âŠand if youâre over 50, you can contribute $7000 per year.
The MASSIVE advantage to doing this is that ALL the money you deposit into this account will grow entirely tax free. For example, if you contribute just $400 per month into a Roth IRA starting at the age of 18âŠand you average a 7% return on your money annuallyâŠyouâll have nearly $1.2 MILLION DOLLARS completely tax free at the age of 59.5âŠall from $400 per month.
Even more remarkable, if you contribute the maximum of $6000 per year starting at the age of 18âŠand you average a 7% returnâŠyouâll have a staggering $2.1 MILLION Dollar by the age of 65. Let me say that againâŠ$2.1 MILLION DOLLARS TAX FREE from just a $6000 investment per YEAR. And Iâll show you exactly how to do that.
The other HUGE advantage to opening up one of these accounts is that you can withdraw WHATEVER money youâve deposited to that account, at any point, without any penalty, and without paying any additional taxes on it.
And the BEST time to start doing this is NOW when youâre young. This is because when youâre young, you have the power of COMPOUND INTEREST working on your side. This means your money makes you more money, that makes you more money, that makes you more money.
The other advantage of starting when youâre young is that, like I said, you invest with post tax moneyâŠmeaning, again, your taxes have already been taken out of whatâs left over. This means that when your young, chances are youâre not making much money and youâre already in a low tax bracket to begin withâŠmeaning you have MORE of your money left over to invest.
So hereâs exactly how to do this and how this works:
You can setup a Roth IRA through websites like Vanguard.com, Charles Schwab, or Fidelity to name a fewâŠbut there are dozens of options out there.
Once you open the account, youâll then have the option to make investments WITHIN that accountâŠremember, the Roth IRA itself isnât the investmentâŠitâs just an ACCOUNT for you to invest in for your money to grow tax free.
In terms of which investments to make, I PERSONALLY just chose an index fund that follows the stock marketâŠbut itâs up to you. You also have the choice to invest in stocks, as well, within a Roth IRA.
However, pay attention to this because there are FOUR very important rules you MUST abide by:
First: As of 2019, youâre limited to $6000 per year that you can contribute to this account. This is your maximum.
Second: Anytime you take money out of the account, you canât just put it back at a later time. So once itâs out, itâs out. Youâre limited to just $6000 per year that can go into that account.
Third: If you take out your PROFIT prior to the age of 59.5, youâll have to pay a 10% penalty + pay taxes on that profit. And that defeats the entire purpose of opening up this account, if you have to pay taxes.
Fourth: If you make MORE than $120,000 per yearâŠyouâll need to do a Backdoor Roth IRA. Just google that because I have a feeling not many people are watching this making more than $120kâŠand if youâre making $120k, you can just google this. Itâs simple.
So basicallyâŠas long as you can follow those four rules, you could be well on your way to becoming a tax free millionaire with just a small investment each and every month!
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