Stock market---ROTH account

[cavedweller]

I am one of the oldest posters on this site..

So, I have some advice for all of you young guys here..

Open a ROTH account with an online broker and invest in the stock market.

ie:

Scotttrade
E-Trade
TDAmericatrade
Schwab
ect, ect,

If you open a ROTH account all gains will be tax free..

 

[Trader]

I am one of the oldest posters on this site..

So, I have some advice for all of you young guys here..

Open a ROTH account with an online broker and invest in the stock market.

ie:

Scotttrade
E-Trade
TDAmericatrade
Schwab
ect, ect,

If you open a ROTH account all gains will be tax free..

Everything you have said is true, but can you figure out why opening a ROTH IRA is a ridiculously *bad* idea for young people?

 

[Mr.Positive]

Everything you have said is true, but can you figure out why opening a ROTH IRA is a ridiculously *bad* idea for young people?

Why is it a bad idea Trader? I contribute to a ROTH as well. Since I've paid taxes on the money already, all the interest compounded over the years will be tax free.

Seems to me like a great thing to do. Also, by the time I retire, I'll probably be getting squat from SS. I figure I'm on my own at retirement.

It is good to plan ahead. I wish I had opened up one sooner.

 

[Trader]

Why is it a bad idea Trader? I contribute to a ROTH as well. Since I've paid taxes on the money already, all the interest compounded over the years will be tax free.

Everything you have said is exactly correct - your money compounds tax-free

But look at it from a different angle

Suppose an economic crisis occurs and hyperinflation or extreme depreciation occurs in USD, and you need to quickly move out of USD and into FX or real assets.

Your money is *locked* in the ROTH and cannot be taken out, unless you decide to automatically incur a 10% haircut AND taxation on your withdrawal (effectively negating the benefits of your ROTH)

Now you might counter: 'Economic crisis of that magnitude? Won't happen.'

But for young people, their money will be locked into a ROTH for the next 25+ years. You are going to bet that there will be no *black swan* in 25 years? I'll definitely take you up on the other side of that bet.

And lastly, remember, the rules of the game can always change, which makes the game, well a joke. You've all heard of how Congress was considering *taking over* your IRA and converting it into an annuity, so you cannot take it all out as a lump sum.

If anything, that is what the 2008 bailout should have taught you, that the rules of the game can be changed by the powers that be (i.e. creating conservatorships, TARP, arbitrarily dashing out derivative counterparty obligations).

In essence, when you load up your ROTH IRA to receive tax-free compounding of gains, you are in essence gambling, gambling against the occurrence of future black swans, both regulatory and economic.

 

[cavedweller]

What I am saying is that the young 'bucks' posting here need to open either a straight account or a ROTH and start investing in the stock or commodity market..

 

[Mr.Positive]

Trader,

Very good points to consider, thanks for your input.

It's important to be diversified, and continue to save for the future regardless of what challenges lay ahead.

For awhile there, I was advocating buying gold and silver bullion, but everytime I opened my mouth about that..people thought I was nuts.

Well, that was when silver was $11 an ounce, and gold $800 something. Silvers now pushing $20, and gold $1250. I did that to diversify out of the US dollar from inflation concerns, and to have some assets physically 'out of the system'. Assets that are portable, and can be taken to any country in the world and be considered to have value.

However, now at these prices, it just seems to damn expensive to save that way. Now I just shut my mouth about it.

I'm leary on the stock market, I have more deflation concerns now. All the debt we've collectively consumed, is not being matched by future productivity. The guy that has a $500,000 mortgage, is his gamble of future producitivity going to match that level of debt? Multiply that by 300 million across the board.

Not to mention our 13T in national debt, and something like 5 times that in future SS and medicare obligations.

States and cities are bankrupt, our whole nation is bankrupt. 40% of our population has less than 10K saved for retirement.

Not to go off on a tangent...but the ROTH, imo, is the best way to save for retirement. Everything I put into the ROTH, I can choose what investments to choose from, and diversify within the ROTH.

I guess, I'm saying the ROTH is my last hope we can turn everything around as a nation before spiralling into another Great Depression.

However, I am trying to be prepared for both sides of the coin. My two bits....

 

[cavedweller]

Myself, I like playing the commodity markets...There is always a bull and bear market in this area..

ie:

corn, cattle and gold are up..

tea, natural gas and cocoa are down...

I am into ETF's and ETN's...

Buy low and when it takes a pop sell it...

my 2 cents

 

[cordoncordon]

I'm leary on the stock market, I have more deflation concerns now. All the debt we've collectively consumed, is not being matched by future productivity.

Deflation is not something you have to be concerned with imo. The bears in the stock market that predominantly follow a non existent deflationary scenario, consistently and persistently fail to comprehend what drives the worlds economies and stock markets which is the inflation mega-trend. Governments and their respective central banks are engaged in a perpetual cycle of inflationary money printing policies with the sole aim of concentrating power and wealth into their own hands by stealing the wealth of savers and purchasing power of workers.

Why ? Because inflation gives the illusion of prosperity whereas deflation acts as a tax on the government (therefore forces governments to contract in size) by increasing the purchasing power of savings and earnings thus under a deflationary environment workers can over time work less for a greater standard of living whilst wages stay constant, which is how it should be in a deflationary world because of constantly increasing productivity of workers that SHOULD result in falling prices.

However governments, and in the US the Fed Reserve, cannot allow for deflation because it effectively takes power away from governments and central banks and places it firmly into the hands of the people. Under deflation governments cannot spend more than they receive in tax revenues, as deficit spending would be inflationary, thus government or the state would be far, far smaller and less significant under a deflationary environment whilst under perpetual inflation, the higher the inflation rate the bigger the size of government which controls all aspects of its people employing ever increasing number of bureaucrats as it in effect taxes purchasing power of earnings and savings through inflation and then again taxes the inflation induced notional gains whereas under deflation there is NO Capital TAX as asset prices would FALL under deflation but at a slower pace than the level of general prices in the economy, so the government LOSES its power to tax earnings and assets under deflation as more wealth is transferred into the hands of savers and earners and corporations and less revenue available for governments to spend on a bloated public sector.

Therefore, governments just cannot allow for deflation to exist and as a consequence of which are in effect always stoking the fires of high inflation as they constantly attempt to play the goldilocks game of inflating the money supply without triggering an out of control wage price spiral towards hyper inflation, the ultimate risks is always of a spiral towards hyperinflation rather then the phony debate of deflation which is just fear mongering to ALLOW governments to fool their populations into perceiving Inflation to be Good and Deflation to be Evil. To achieve this the governments are engaged in a perpetual game of under reporting the real rate of inflation and engaged in the production of propaganda on future inflation expectation.

It just isn't in the powers that be-mainly the Fed Reserve- best interest to have deflation, and trust me, they are the ones who are calling the shots right now.

 

[Mr.Positive]

It just isn't in the powers that be-mainly the Fed Reserve- best interest to have deflation, and trust me, they are the ones who are calling the shots right now.

True, the FED Reserve can control the monitary supply, however the FED can not control the velocity of money. The velocity of money is the driver of inflation. The banks control that. Right now, everything is deflated due to the housing bust. The banks have not opened the floodgates to refill the water 'missing from the pool'. They are still sitting on billions worth of toxic assets.

To wipe out the toxic assets, and let the dust settle...requires deflation.

I am not an economist in any way, but the system you've described is basically keynian economics, correct?

Keynes himself said his system would not work in capitolism, but would thrive in socialist societies.

 

[Julius_Seizeher]

But the Roth is the way to go, because you are essentially taking the bet that taxes are only going to go UP and you'd rather pay them now.

But you also have to consider what tax bracket you will be in when you retire. Most people are obviously in a lower bracket because they aren't earning anymore, but if you would find yourself higher (perhaps due to owning property, businesses, farmland, etc.), then the Roth is a given.

So the Roth is usually the way to go, with a Traditional IRA being favorable to certain situations.

 

[cavedweller]

Info for the investers here: (I won't send you a bill)

Check out the charts on commodities...

Be it corn, crude oil, live cattle, tea ect. ect. ect.

Two facts---the price always rolls and they don't go bankrupt..

Another fact: They have been trading that stuff for over 5,000 years.

my 2 cents