Here at SuccessfulYoungInvestor.com, we promote the idea of thinking ahead and planning for your future. One possible way to do this is through a Roth IRA, but is it right for you? Although the market environment has brightened a bit recently, the past year has obviously been a challenging one for investors. Amid such a difficult climate, your best bet is always to focus on what you can control and tune out what you can’t.

In the category of what you can control, at least in part, are your investment costs, and that includes the tax costs associated with your portfolio. Not only does it pay to consider the current tax treatment of your investments, but it’s also worthwhile to think about what tax rates and your own tax position might be like in the future. Because I think it’s a good bet that tax rates will go up in the coming years, and I say this not because of the election but because of the staggering demands on our government’s coffers. It makes sense to brace your portfolio for that possibility.  

Roth IRAs, to which you contribute aftertax dollars but enjoy tax-free withdrawals, are one way to hedge against the possibility of higher taxes. Roth 401(k)s, which are growing in popularity, also allow you to take the tax hit now rather than later. If you fit the profile of someone who could benefit from a Roth 401(k), you owe it to yourself to understand how this vehicle works and whether it could make sense for you.

Check Roth IRAs out further here.

Thank You,

SuccessfulYoungInvestor.com