Wednesday, January 18, 2006
Over the past several months I have been reading other personal finance blogs and many proclaim the benefits of the Roth IRA. The tax-free growth and the ability to withdraw contributions penalty free are just two such benefits. In the past, I was always comfortable simply allocating as much as I could afford to my 401k account. I have done some thinking and reading and now feel that is likely not the most tax effective strategy for someone my age and with my income. Going forward, I am going to continue to contribute 8% of my salary to my 401k; therefore insuring that I continue to receive the full company match. The extra 2% I was contributing to my 401k will now be invested in a Roth IRA. I will end up contributing the same amount towards my retirement in total just in a little different way. Since I currently do not have a Roth IRA established, I will be researching the various brokers, likely just Fidelity and Vanguard, and establishing an account at the one that is better suited for me.