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naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

I've got 2 IRAs. one that I pay taxes now and one that I don't . Havne't had a taxable income for about 4 years now. Hopeing to get 5000 by the time I'm 25, I've been told that would set me up when I'm reitred.

Jizzo T. Clown · Posted: Tue Nov 29, 2005 9:52 pm Post subject:

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

Talk to your financial advisor. I went through my parents advisor.

Joe Gahona · Joined: 24 Apr 2004 Posts: 27 Location: New York City

Roth IRAs are tax-free, and in my opinion it should be the first line of retirement savings. You are limited to investing $4K/year, but it goes up to $5K in 2007 (I think). When you're 60, you can pull out every last cent and you won't be taxed at all.

I wasn't trying to stress the lower-income people are worse tenants than high-income people -- I used to do wood floors for my buddy's company, and in general the nicer the house was, the fussier the people were. (We did some places that looked like crack houses in Detroit and the people were usually great.) My point was that real estate has a hassle factor that's not there with regular ol' investing -- which is fine for someone like you who enjoys it and doesn't see it as a hassle. But I know people who've gone into real estate thinking it was strictly an investment and were in for a rude awakening when problems arose.

tedkarma · Posted: Wed Nov 30, 2005 6:51 am Post subject:

tedkarma · Posted: Wed Nov 30, 2005 6:42 pm Post subject:

An important consideration about real estate is that it adds a stability to your investment portfolio - that other investments generally can't.

Okay, bonds are stable - but don't offer the income protection that depreciation provides - nor the potential appreciation in price that real estate can provide (okay you can get some appreciation in bonds when interest rates go down - but it is a sophisticated game I don't want to play).

Also, the illiquidity of real estate keeps you from being too implusive about your investment plan - you know you could/should hold on to it for 8-10 years or at least through a full economic cycle before selling.

And - don't forget tax advantages when you do unload. I just made a significant gain on the sale of a condo - and my total tax bill for the gain (net minus basis) bill will be less than 5%. Hard to beat!

moot point · Joined: 22 Feb 2005 Posts: 441

On the topic of bonds tedkarma wrote:

tedkarma · Posted: Wed Nov 30, 2005 10:43 pm Post subject:

moot point · Joined: 22 Feb 2005 Posts: 441

Thanks. That is clearer now. Originally, I thought you were referring to how bonds work.

JZer · Joined: 16 Jan 2005 Posts: 3898 Location: Pittsburgh

tedkarma,

it is true that cheaper properties tend to produce a better return. I don't know if you remember but we talked about real estate before. I AM currently looking to buy a house in my hometown for $40,000. The rent per month would be $850. The one disadvantage of properties in poor neighborhoods is I don't think they appreciate as much, so they should be looked at soley for their returns from the rent that is being paid.

I am not expert but this is my opinion.