I am 20 years old, I plan to retire before age 60. What would be the best way to invest my money tax free.?
609996
Life insurance should only be bought to replace your income if something were to happen to you. Life insurance will not fund your retirement, but it will help your family be financially stress free for awhile. Keep in mind, you should avoid these type of policies: Whole Life, Universal Life, and Variable Life (or any mixture of those sort). Why? They are expensive and the cash value associated with it must be BORROWED if you want to use it. So the type of life insurance you should get right now is a 30 year TERM INSURANCE base on your age. Why? The longer you wait, the more expensive it gets (in any life policy). How much coverage you want is up to how much you think you can afford each month (general rule of thumb is to multiply your annual income by 10 to get the coverage amount).\n\nYou are correct that a ROTH IRA is good way to go to invest for your retirement. I recommend investing in Aggressive Growth Funds. I like Legg Mason Partners Aggressive Growth Fund. It has an average rate of return of 14% in the past 25 years.
808200
You already have several answers suggestion a Roth IRA.  That is an excellent choice, but only if you will not be needing the money until 59 1/2.  It is a retirement account.  There are some exceptions.   You should place some of the 10k where you can get to it in an emergency, maybe 3k.  It is always a good idea to have some cash available.  ING has internet savings accounts that pay 5% with direct transfer to your checking account.  \n\nYou are young so you can afford to be a little aggressive with your money in the hopes that it will yield a very good return over the long term.  Assuming that you would invest 7k,  separate it into 3 about equal piles and invest 1 part in small cap stocks.  Royce Funds has a great selection of them and a terrific track record yielding  about 13% annually over the long term.  1 part in a value stock fund.  There is a decent index fund that is a value fund--EFV.  It has done extremely well so far with a 30% annual return.  But do not expect that to continue.  10 to 12% would be an excellent return.   The last part in a growth stock index fund or mutual fund.  FXI would fall into that category.  It is a China index fund.  Up about 38%  this year.
120424
Try the following: 1)Get the actual amounts you are eligible for at ages 62, 65 and 70 from the SSA.  2) Assume your remaining life span. Since you do not appear to need the money to live, base your decision on the maximum SS $ you will receive based on your assumed age at death.  For example if you are entitled to $1,000/month at age 62, or $1,200 at age 65 or $1,700 at age 70 and you assume you will live until 85 then the math would suggest if you began to draw at 62 and lived until 85 you would draw a total of $276,000; $288,000 if beginning at age 65 and $306,000 if you waited until you were 70. Ofcourse these calculations do not include the added cash you would accrue if part or all of the money were invested as you aged.  Remember the RULE OF 72. What percent do I need to double my money???  Divide 72 by the number of years and the answer is the percent needed.  For example to double your money in 12 years you would need 6% compounded.  (12 times 6 = 72).  It also works in reverse - if I can invest at 9% APR and compound the interest it would take 8 years to double my money. (9 times 8 = 72).  Teach this rule to your children and grandchildren and they will easily see the value in saving....and they have the best advantage of all.....TIME
453876
First be careful of "rolling" any money without checking the tax consequences of the event. The IRS will get the money one way or the other-make sure it doesn't happen too early or for the wrong reason. Using the 401k to pay off debt should only be done if you can absorb the early withdrawal penalties ( taking contributions prior to age 59.5 for reasons such as credit card debt are subject to ordinary income tax plus 10%- you could potentially lose 50 to 60 percent of the withdrawal off the top) \n\nThe Roth IRA is a good product for retirement, however there may be other avenues you could go with money (depending of what you want out of your investment portfolio) that would not result in certain tax consequences and allow access to your money.\n\nemail me with further questions - i deal with these situations on a regular basis\n\ntake care
757641
Yes you could but it would not provide much benefit if you were going to use the money within one year of starting the fund.  Most of these plans grow tax free and you would have very little growth in that time frame.
673210
I recommend low-cost mutual funds.  Vanguard has many good ones, and Fidelity has some very low-cost index funds.  Look for tax-managed funds, or tax-exempt bond funds.  Some bond funds are exempt from taxes in a particular state as well. However, tax exempt bond funds give lower returns.  You should talk to a tax advisor to see which way is better for you.  In stock funds, index funds tend to have lower capital gains than actively managed funds, and the returns are often just as good or better.\n\nIf your stock isn't already in a retirement fund, you can't just put it all in there at once.  You're limited to $4000/year in contributions. Do a Roth IRA if you can, but there's an income limit, and the stock sale may put you over that limit.  If you don't qualify for Roth, put what you can in a traditional IRA.  Either way, inside the IRA you can buy some of the mutual funds I mentioned.\n\nIf you can transfer $4000 worth of stock directly into the IRA and then sell it, that may avoid the capital gains tax on that portion.\n\nAny single stock is a high-risk investment, because it can go up or down quickly, so you can reduce your risk a lot by selling and diversifying (into those mutual funds.)  The bad news is that you'll have to pay capital gains taxes on the sale of your stock, especially if you've had it for less than a year.\n\nYou should also talk to a tax professional about the Alternative Minimum Tax, which can hit you if you have a large capital gain like that.\n\nBy the way, real estate has been fantastic recently, but it's showing signs of slowing down.  This may not be a good time to invest heavily in real estate.
300890
In my opinion, as long as you do not try to withdraw the money early (before 59 and 1/2 years old) a roth IRA is the best vehicle for retirement if you qualify for it.  Within the roth IRA you can invest in mutual funds that focus on bonds if you would like, or more aggressive funds if you like.  You can definitely make an asset allocation that suits your needs and risk tolerance.  Hope this helps.
678923
My personal opinion is that you'll eventually want to open both.  But at your age, you have a long time to go before retirement, and that makes the Roth much more attractive.  The different is that, with a Roth, all the growth inside the account will eventually come back to you completely tax-free.  Since you've got many years ahead of you, your investments should have grown a great deal by the time you retire, and that will benefit you the most.\n\nLater, when you're in your 40's or 50's and your income is much higher, perhaps you'll get more benefit from putting money into a Traditional IRA and taking the deduction.  Also, it will be nice to have both types of accounts to choose from when you're retired and want to have the ability to decide which account to take money out of.  But, for now, the Roth will provide you much greater opportunity.\n\nThe second question, which you didn't ask, is "How should I invest the money inside the account?"  At your age, I'd lean heavily toward growth stocks.  Best of luck to you.
81277
If your company offers a 401K plan, take advantage of it.  They'll take out a fraction of you paycheck (as lo as 1%) and invest it in a mutual fund.  Many companies match your contribution, so that's like free money.  \n\nIf you just forget about it and just let it grow, you'll soon build up quite a bit of dough.\n\nIt's tax deferred, so that means you won't pay taxes on it until you cash it out.\n\nThe only drawback is you can't cash it out until you're 59 and a half without paying a penalty.
877531
The most secure investment that will bring a HUGE return over the years, and is a "sure" thing, is education. Invest in yourself. It is corny, but true. With the money, learn investments. I did years ago and have benefitted from it many times over, knowing what to look for in stocks, bonds, munis and mutuals.\nIf you want to do it on the cheap, there is a little book you can buy for less than $10 in a used book store. It will point you in the right direction. It is my "bible" on investing:\nThe Richest Man In Babylon" by George Clason.\nhttp://www.profitadvisors.com/richest.shtml\n...jj
69019
depends on the fund. many funds underperform the market indexes. it also depends on your objective. are you young, then if so you might want a basket of agressive funds for your future. if you are living off a fixed income in retirement then Treasury bonds would be much safer. check out i bonds as they currently yield over 6%. you need to hold them at least 5 years to avoid penalties, but they have inflation protection and you dont pay taxes on income until cashed in.
142039
Go with a 529.  Great tax advantages.  You can then pick from a ton of investment choices to place inside of the 529.  For more info - http://www.529s.com
273119
beginnersinvest.about.com and earlyearners.com\nTwo websites you can check out. Best way to start investing is to just by setting aside a small about each week or month i.e. 25.00/week and letting it set in a savings account until you find a certain investment you would like. Whatever you do make sure that the investment is something you are comfortable with. And whatever anyone tells you nothing will guarantee a return except goverment obligations such as government issued bongs and banks. OTher than that there is risk. However risk isn't necessarily bad. Just research before you buy.
268552
Depends a lot on your age.\n\nIf you were 50+, I would consider an inflation indexed annuity, as it would yield more than enough money per month to live off off. No risk, no excitement, but no work either.\n\nIf you were 40-50, I would consider a laddered set of I-Bonds (5 year bonds purchased so that 20% of them mature each year) with about 50% of the money, and the rest invested in dividend-paying solid companies (direct share ownership or low MER mutual fund). The 50-50 split could be played with depending on your feelings. I am more bearish, so I would go more for the I-Bonds, and less for the stocks.\n\nIf you were 20-40, then I would be more speculative. I would put about 25% in the ladered I-Bonds, 25% in high-dividend stocks, 25% gold and silver bullion, and 25% in commodities stocks.\n\nAll of this advice assumes that you have no debt. If you did, pay it off first.
308086
- Assuming you're a US resident over 18 -\n\n1. 401k. Put aside as much as you can afford or as much as your employer will match. i.e. My company will match my contributions up to 6% of my salary so that's what I put into my funds each year.\n2. Pay off debts! Credit Cards can be wonderful tools, but they can also bury you and kill your credit rating. As a bonus, use a rewards credit card like Discover or Amex Blue - they pay you back 1% - 5% of what you charge.\n3. IRA's. Open an IRA or a ROTH IRA with a broker like Smith Barney and begin contributing to it on a regular basis. \n4. Set up a high yield savings account - Citibank and Emigrant Direct both offer savings accounts at 4.5% APY.\n5. If you rent, look at buying a house or condominium. (ONLY IF YOU CAN AFFORD IT). Property has traditionally been a great investment.\n\nNo guarantee’s these will make you an overnight millionaire, but they will give you a firm footing to build on.
557091
the "best" investment you could make has to do with your knowledge and experience with investing, and by the sounds of it you dont have much of either. I wouldnt invest in any stocks or bonds, or anything with high risk until you know about tax laws, financial institutions, etc. Educate yourself first or blow all your money away. Trust me there are plenty of people out there waiting to take your money away from you.\n\nI would suggest a ROTH IRA, since your principal is not taxed, and has a very high return for younger people over a long period of time. \n\nAnother thing u could do with your money is start a business and sell it once its successful (for a few million dollars or whatever it happens to be worth) -- but like investing you should educate yourself first.\n\nAnother best bet as a non-experienced investor is to start out safe in Money Market accounts that have near 5% interest rates like ING direct orange account, or HSBC Money Market Savings account as some examples.\n\nThe CD thing sucks becuz they tie your money up for long periods of time whereas money market savings accounts are easily liquidible.\n\nOh i should mention also that ROTH IRA has no penalities on withdrawls you make against the principle, and you can use money from a ROTH IRA to buy your first home too!
632453
The main reason you invest money is because you will need money in the future when you retire.  You also invest to buy a house or to save for a time you are layed off.\n\nFirst, I would make sure you have at least 3 months salary saved up in the bank or in a money market fund for an emergency fund. Financial disasters like getting layed off or sick happen to all of us.\n\nSecond, I would pay off all high interest debt. Pay off everything you can except the house mortgage. Paying off debt is one of the best investments you can make. You will have more money in the future because you won't have credit card bills to pay.\n\nThird, if you have money left, start investing in stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks, as individual stocks are too risky. For most folks this means buying mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money conservatively, in money market funds and bond funds, and part aggressively in stock funds. Vanguard.com has an on-line questionnaire which will give you an idea how aggressive you want to be. \n\nInvesting in a mutual fund IRA for retirement may give you an income tax break. Talk to your tax adviser. You may also be able to invest in a stock mutual fund via a 401K plan at work.\nTaking advice off someone you met over the Internet and know nothing about is risky. Read these websites for further information.