Roth IRA’s Explained with Barbara Ginty – EP 158

Understanding investing terms and options is not for the faint of heart, but we don’t have to be experts in order to make wise, frugal financial decisions for our future. On this episode Barbara Ginty shares in some very understandable and approachable ways some of the basics of investing and how to take advantage of Roth IRA’s.

Sponsors: 

  • Your Emergency Fund. Whether it’s $500, $1000, or $15,000, you need money set aside in case you’re laid off, are unable to work, or for any other emergency expense. And keeping it in a high-yield savings account separate from your regular checking and savings lessens the likelihood of spending it. Any high-yield savings account without fees or minimum balance requirements will do. Currency we like AXOS bank for its lack of fees and impressive .61% APY. And when you sign up for an account through frugalfriendspodcast.com/axos you support the show at no extra cost to you.
  • The School Bus. it was scary at first – with all those competing questions: ‘will the driver see me?’ ‘How do they get the door to open?’ ‘will I trip up the stairs?’ ‘where will I sit?’ and even though the worst case scenario to all of these questions does eventually happen; we figure it out until finally we’re enjoying jawbreakers until our tongue bleeds, playing rounds of punch buggy in between trying to get truckers to honk at us from the back seat (ya know – where the cool kids sit). The school bus; much like financial planning for retirement – it’s scary at first but soon enough you know just where to sit and how long you can sleep in until you legit miss your ride.

Get more on this topic with these episodes:

Ep 146- Understanding the Stock Market w/ Bola Sokunbi

Ep 94- Retirement 101

Interview

  • What is a Roth IRA and how does it work?
    • Vehicle for money!
    • Individual Retirement account
      • ROTH – after tax (not getting tax break today-wait til 55years old to pull out tax free)
      • Choosing when to take the tax break – now or later?
      • Learn tax code and take advantage! Tax avoidance vs. tax evasion
      • Time is the best advantage we have – it’s invaluable
  • What’s the difference between a Roth IRA and 401k and why would someone choose one over the other?
    • IRA – anyone can have one; do it yourself
    • 401K work retirement plan (457, 403B) – what work offers you
      • Traditional – pretax
      • ROTH 401K – post tax
      • Ability to max it out at higher level
      • Required minimum distribution (RMD) – must take a minimum amount out at 72
  • What are the downsides of a Roth IRA?
    • Not getting the tax break today
    • Low annual limit
    • Income limit – eligibility requirements so not everyone qualifies
  • Where does someone open a Roth IRA?
    • Any financial institution – ROTH is vehicle NOT the investment. Choose one that you are happy with the investments

BILL OF THE WEEK –  Thank you Barbara for sharing your bill about refinancing to a lower interest rate and cutting 10years off your mortgage!

If you want to submit your bill of the week visit frugalfriendspodcast.com/bill to leave us a bill

Lightning Round

Roth IRA opening stories

  • Barbara- learned about compounding interest on the today show and asked dad to open a Roth but he opened a 529 instead
  • Jen- almost opened with an insurance company then listened to a youtube video with Joe Saul-Sehy and Paula Pant talking about index funds.
  • Jill- OH MAN. Let’s just say I’m a frugal friend – not a retirement expert! Thanks Jen for helping me open one 🙂

Get more from Barbara at:

-futurerichpodcast.com

Wrap-Up:

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Thanks for listening! See you next week!

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