Anyone have a Roth IRA?

[Patton]

Hmmmm, spend less than you make, don't borrow money and don't use credit cards. Lots to disagree with there???

That is sound advice and something our government should live by. Times have changed and his investment advice is 10 or 20 years too late in same cases. Like Mutual Funds..Real Estate...I tend to think that a small mortgage is something you should always have. I try to have very little in my name and always owe a little money on my assets. My MIL listened to me when I said not to pay off the last 10k of her mortgage until she was retired. She would have lost her home in a lawsuit if she had not listened. Being that she showed debt the injured party and their insurance dropped the claim. Also when I sold cars, before Ramsey started his tours, I would have people come in and pay more for a used car than a new because the experts say...

If you went against Dave's advice you could have doubled your money in 3years. The highest gold got per oz was about $1900.

As far as investing. Just google "Ramsey bad advice". You will be surprised.


In light of current events, we must not forget the gurus of smoke and mirrors who betrayed their sheeple followers.

"Gold is a dumb idea."

January 23, 2008 - Dave Ramsey BASHES Peter Schiff and GOLD!
Gold closes @ $890 per ounce.
Dow closed @ 12,270.
****************************
August 4, 2011 -
Gold closes @ 1648.80 - up 85% since "dumb idea" quote.
Dow closes @ 11,383 - down 8% since "dumb idea" quote.

Dave Ramsey still has a job? UNBELIEVABLE !!(http://www.dailypaul.com/172807/the-curse-of-dave-ramseys-bad-advice) Edited April 1, 2013 by Patton

[gregintenn]

I tend to think that a small mortgage is something you should always have.

You can't back that statement with a calculator. :shrug:

[xRUSTYx]

You can't back that statement with a calculator. :shrug:

 

Actually, you can, assuming your interest rate is lower than anticipated/realistic inflation :) 

[Patton]

Yes, <5% intrest rate! If you are paying anymore right now consult a trusted professional.

Here are my points:
A mortgage is one of the smartest loans you can get. Take a 4% rate, over 1/3 of that is tax deductible.
If you have an emergency and need to borrow money beyond your savings, it is easier to refinance when you already have a small loan. Unless you are old enough for a reverse mortgage(great thing btw), it is a huge hassle to refinance after you own your home. I have known people that had to have 20-30k quickly for whatever reasons. Bail, medical, other property, daughters wedding, etc. Refinancing your home is a lot smarter than cashing out a 401k or a Roth savings.
The government for forfeiture or civil will not take a home you owe money on, except in very very unusual sircumstances.
A mortgage will be the last loan I pay off except for a <1% car loan.

[Patton]

If I am not mistakn, Dave Ramsey has said pretty much to not get a home loan or if you do pay it off immediately. He has also said to invest money in real estate. If you would have invested one million dollars in real estate 5 years ago I believe you would have been lucky to escape tommorow by only losing 10% of your investment. I believe the new trend of investments will be more of the illiquid asset types. All this assuming the dollar continues to decrease. It makes sense, items not normally too transferable to money will be more transferable to trades.

[xRUSTYx]

It makes sense, items not normally too transferable to money will be more transferable to trades.

 

This is good logic.  I think bartering will continue to be on the up & up while the dollar decreases.  How the USD has been able to be propped up for so long boggles my mind.  PM's are having a bad day - they've been relatively stagnant for the past few months.  Common sense says with the weakening dollar, PM's should be moving up - but not so.  Other powers that be are having their way with PM's.

[Patton]

I am really glad no one has asked me what to invest in for tomorrow. The truth is I haven't a clue. Ammo or primers? Honestly, it's likely you could see a huge return in investment. Some of the less common PM's like pewter, lead, platinum, or even stainless steel will probably far exceed most any financial investment. Silver will grow a little more but gold is about topped out for a while. I do foresee inflation continuing at a consistent annual 2%.
I still would stay clear of land unless it is really a bargain. My family has land for sale that has been in the family for +100yrs, it is cheap and not selling. Location-Location-Location, immaterial because it is dead square in the middle of one of the fastest growing zip codes in TN. Edited April 2, 2013 by Patton

[Patton]

For someone under 40, is prepaying for funeral services and plots as great of an investment as one may think it is? I am a veteran so it is a lot less of a concern for me. However, for others it seems like if you will be passing savings to your family a prepaid funeral service is a no brainer,great investment payed for at yesterday's prices.

[monkeylizard]

That depends on if you think you're sure of where you'll be buried. It would suck to have a prepaid plot in Knoxville but be retired in Florida when you die and your kids all live in Wyoming, and nobody you know lives in Knoxville any more.

Edited April 2, 2013 by monkeylizard

[gregintenn]

Actually, you can, assuming your interest rate is lower than anticipated/realistic inflation :)

Not really. Show me how paying a mortgage with interest would put you ahead of investing the same money each month into the interest bearing account of your choosing.

[Patton]

^Having a small mortgage of <$300 a month is more of a safety net and tax shelter and not an investment. It is also a convenience if an emergency happened where you could draw money from another source if not seek a refinance. Something else, if I paid off my mortgage tomorrow I would have to pay money to the bank for upkeep of my accounts.
Even Ramsey will say to occasionally take out a loan and quickly pay it off so as to never become a ghost. You never know when you will need credit. You may have that brilliant buisness idea and know you will become reach in just 5 years if you cant borrow the money you will have to bring in a partner.

[gregintenn]

^Having a small mortgage of <$300 a month is more of a safety net and tax shelter and not an investment. It is also a convenience if an emergency happened where you could draw money from another source if not seek a refinance. Something else, if I paid off my mortgage tomorrow I would have to pay money to the bank for upkeep of my accounts.
Even Ramsey will say to occasionally take out a loan and quickly pay it off so as to never become a ghost. You never know when you will need credit. You may have that brilliant buisness idea and know you will become reach in just 5 years if you cant borrow the money you will have to bring in a partner.

I don't know where to begin. Pretty much everything you've said here is incorrect. How is a mortgage a tax shelter? In case of an emergency, why not pay cash instead of borrowing more against your house? Why do you pay your bank to keep money in it? I don't. Dave Ramsey states emphatically that you should NOT worry about your credit score. As for the brilliant business idea, you can do it without a loan or partner if you have cash! That's what you get to keep for yourself if you aren't spending it all in interest and debt.

[leftyk82]

Agreed. The borrower is slave to the lender. Edited April 2, 2013 by leftyk82

[2.ooohhh]

If I am not mistakn, Dave Ramsey has said pretty much to not get a home loan or if you do pay it off immediately. He has also said to invest money in real estate. If you would have invested one million dollars in real estate 5 years ago I believe you would have been lucky to escape tommorow by only losing 10% of your investment. I believe the new trend of investments will be more of the illiquid asset types. All this assuming the dollar continues to decrease. It makes sense, items not normally too transferable to money will be more transferable to trades.

 

Your very mistaken, buying real estate and reselling is a much harder way to make money b/c you have to keep doing it to keep making money. If you have cash buying and renting in the right areas is they way to make much more return.  I make more in a given year from our rental properties than I do at work, and if you invest in the right mix of properties they will rent with ease for years to come. My house on the west coast alone brings in several thousand dollars per month from March to September with sporadic rentals in the off season. Keep doing it for years(or generations) and the family can now vacation in FL, OR, TN, SC, Europe, or South America at greatly reduced cost. 

 

It is not the only investement, but it is one of our best investments, to answer the OP's question, my salary is funding my retirement split between a 403b(to get company match) and the remainder into a ROTH IRA up to the maximum rate allowed by the tax code. The income from the rentals is used for further diversified investments in property or short term investments such as business ventures.

Edited April 2, 2013 by 2.ooohhh

[Patton]

Everyone is reading me wrong. The remaining 10% of my mortgage will be the last loan I ever pay off early. I think my rate is 3.35% I itemize enough to were it benefits me to pay some interest. When I get it down enough I will do a Roth IRA but I will not sacrifice investing to pay off the mortgage early. Like I said, you generally will not loose your home in a lawsuit if you owe any money on it. This is the number one reason to owe a little money. My MIL is a living example of why people sue. Give them nothing to sue for and they will be less likely to sue. It has nothing to do with investing but everything to with lawsuits. Have as many of your bills as automatic allotments as possible, it is less to come out when you get sued.
I can take you and introduce you to a family that had all their savings invested in a home $1 million. Their 16 year old son killed several in a car wreck and lost their home. They should have kept a small mortgage and had their money invested. Edited April 2, 2013 by Patton

[Patton]

Your very mistaken, buying real estate and reselling is a much harder way to make money b/c you have to keep doing it to keep making money. If you have cash buying and renting in the right areas is they way to make much more return. I make more in a given year from our rental properties than I do at work, and if you invest in the right mix of properties they will rent with ease for years to come. My house on the west coast alone brings in several thousand dollars per month from March to September with sporadic rentals in the off season. Keep doing it for years(or generations) and the family can now vacation in FL, OR, TN, SC, Europe, or South America at greatly reduced cost.

It is not the only investement, but it is one of our best investments, to answer the OP's question, my salary is funding my retirement split between a 403b(to get company match) and the remainder into a ROTH IRA up to the maximum rate allowed by the tax code. The income from the rentals is used for further diversified investments in property or short term investments such as business ventures.

Two things; Ramsey not Me says to invest in real estate. It never seemed worth it to me. Rental property Works for some but is a nightmare for some. It was for my family.
All this investments are normally great until experts tell people to do it, that's when it is not as great as it once was.

[2.ooohhh]

Dave Ramsey preaches not investing in anything you don't fully understand, which I fully agree with. If I have to pay my lawyer 6 additional hours to go over every detail in a contract with me than that's what I do until I know what's happening inside and out, who's doing what, how much they get paid, who's paying them, and how much it'll all cost compared to the projected return.

Edited April 2, 2013 by 2.ooohhh

[analog_kidd]

I've heard people say they keep a mortgage because they need the tax deduction that paying mortgage interest gives them. But, if you actually do the math it does not work out in your favor.

 

Using round numbers, let's say the average person/family is in the 25% tax bracket. makes $50k and pays $10k in interest (hopefully early part of the loan). Given these numbers, you would get to deduct the $10k from your income, but at a 25% tax rate that only saves you $2,500 (25% of 50K = $12,500 tax versus 25% of $40k = $10,000). So by paying all that interest, you have paid $10,000 to save $2,500 worth of tax. If the mortgage was paid off, you would pay $2500 extra in taxes, but no additional interest, thereby coming out $7500 ahead.

 

As Dave says, if you really just want that tax deduction, donate to a charity. You get the EXACT same tax shelter and you help an organization that you believe in and that needs your help.

[Patton]

As far as deductions you will get no more than 1/3rd of your total interest back.

[Erik88]

:hijack:

 

 

but interesting dialogue.

[Erik88]

I was referred to a financial advisor back in Knoxville who will help me decide the best route to take.

 

She said it was very rare for someone my age to be this knowledgeable and interested in investing. I told her it's too bad Americans are more concerned with American Idol than their finances.

[Patton]

Still though, I would get into a home first, unless you think you will be moving a lot.
If I had 10k I would go here https://www.merrilledge.com/m/pages/mobile/splash.aspx. It is not going there but it is a BOA Money Market Roth IRA

The way it was explained to me 10K and then 5k a year for 30yrs could make about $750k
https://www.bankofamerica.com/deposits/iras/fdic-insured-iras.go Edited April 3, 2013 by Patton

[gregintenn]

I itemize enough to were it benefits me to pay some interest.

                       

As far as deductions you will get no more than 1/3rd of your total interest back.
 

How does this benefit you?

 

              

I can take you and introduce you to a family that had all their savings invested in a home $1 million. Their 16 year old son killed several in a car wreck and lost their home. They should have kept a small mortgage and had their money invested.
 

...and some people who weren't adequately insured. I'm not sure what you're smoking if you think people can't sue you and win a settlement against investments. Anything you own is subject to lawsuits.

 

 

Eric, I'd be very careful who you take investment advice from. I would suggest someone who has some money.

Edited April 3, 2013 by gregintenn

[Erik88]

Still though, I would get into a home first, unless you think you will be moving a lot.
If I had 10k I would go here https://www.merrilledge.com/m/pages/mobile/splash.aspx. It is not going there but it is a BOA Money Market Roth IRA

The way it was explained to me 10K and then 5k a year for 30yrs could make about $750k
https://www.bankofamerica.com/deposits/iras/fdic-insured-iras.go

 

I would love to buy a house but I need to save more for a down payment before I can do so. We really don't want to stay in Orlando for longer than 3-4 more years so we may rent until it's time to relocate. 

[TMF]

I'm very close to paying off my student loads(8 years early :cheers: ) and based on the little research I've done I think the best way for me to start investing would be to open a Roth IRA. I already contribute %5 into my 401k through work but it's not growing as quickly as I would like and I feel like it would be smarter to open an IRA instead of upping the contribution to my 401k.

My question is, can someone recommend a company to open it with? I asked the woman at Suntrust who helped me open my account when I moved to Florida about IRA's and she had never heard of a Roth IRA so they lost any chance of getting my money.

Thanks!

Both my wife and I have Roth IRAs managed by Edward Jones. What's nice about them is they are national, so I will still have a local office even if I move. I used to have an account and car loan through SunTrust when I was in FL, and it was a little bit of a pain when I moved to TN; I imagine it would be even more of a pain had I had an IRA through them.