• How exactly do regular IRAs and Roth IRAs "grow" in layman's terms?

    Best answer: I'm guessing that you are investing in mutual funds not individual stocks. (But you might be doing both.) The mutual funds pool money from other investors and buy a "basket" of stocks. So if you buy a transportation mutual fund (say fund XYZ) they are buying stock in several companies all at once. ... show more
    Best answer: I'm guessing that you are investing in mutual funds not individual stocks. (But you might be doing both.)
    The mutual funds pool money from other investors and buy a "basket" of stocks. So if you buy a transportation mutual fund (say fund XYZ) they are buying stock in several companies all at once. Not just companies like UPS & Fed-Ex, but also CSX (Trains), JB Hunt (Trucking) and freight liners to name a few.
    If you're buying a banking fund you are investing in companies like Citibank, Chase, PNC, Wells Fargo, American Express, Visa, Master Card, etc.
    As these individual stocks go up and down the mutual fund value goes up and down. Fund XYZ will go up when the transportation stocks do well and go down in value when the don't.

    Buy buying a basket of funds you are reducing your risk on if a single stock will go up or down. If UPS went out of business tomorrow (think Kmart, or Kodak) and you only owned UPS then you would be out of all your money. By buying the mutual fund instead of the individual stock you are "diversifying" your investments.

    Stocks make money in two ways. One is if they pay out a dividend. Think compounding interest if you reinvest the dividends over time. The other way is if the stock goes up in value. Someone else gave an example about if you bought a $100 stock and the value went up to $200. Keep in mind the stock could also go down in value to $50 or even zero (Toys R Us and maybe soon Sears.)

    The mutual fund helps mitigate losses, so if UPS went down 10% and Fed Ex went up 5% trucking up and freight liners down then you wouldn't be so bad off. You might not make as big a gain as if you took a risk on an individual stock, but you reduce the risk of losing money (not eliminate risk.)

    So your IRA grows by dividends and the value of the stock. (Also any additional contributions that you make over time.)

    The Roth is not guarded against future inflation it is guarded against future TAXES (At least for now.)
    A Traditional IRA you put in money before taxes are take out.
    Say you put $5000 in a Traditional IRA when you claim your income on your taxes you get to reduce your income by that amount, so if you earned $55,000 in a year the IRS will adjust that to $50,000 and only tax you on $50,000 worth of income. When you take money out of your traditional IRA you then have to pay taxes on what you take out at whatever the current rate will be when you retire. (It's an unknown.)

    If you put $5000 in a Roth IRA and you earned $55,000 for the year the IRS will tax you on $55,000 of earnings. But when you take money out of your Roth IRA after you retire then you will not have to pay any taxes on what you withdraw (you paid the taxes up front.)
    16 answers · 2 weeks ago
  • How to perform futures trading?

    9 answers · 2 weeks ago
  • Is there a service that can assist me in challenging my stock brokerage informing me that I must leave them?

    My stock brokerage has horrible service representatives and a multitude of software problems. Ask a question and get an incorrect answer. Or quite literally if you have a problem they may ask what you want them to do. Have not used foul language but I have at times let them know my opinion of their service. With... show more
    My stock brokerage has horrible service representatives and a multitude of software problems. Ask a question and get an incorrect answer. Or quite literally if you have a problem they may ask what you want them to do. Have not used foul language but I have at times let them know my opinion of their service. With no previous contact I received a telephone call today telling me that I had a month to find another brokerage. I wish to challenge this. Where do I go for help? Thank you.
    15 answers · 2 weeks ago
  • I want to invest into stocks. What is the easiest way to invest at 18? And could someone explain how the stock market works.?

    I'm 18 and I want to invest in stocks. I think I already know the risks, but if someone could explain how the stock market works that would be great. Also how DO I invest? I want the simplest way. Without a broker.
    I'm 18 and I want to invest in stocks. I think I already know the risks, but if someone could explain how the stock market works that would be great. Also how DO I invest? I want the simplest way. Without a broker.
    16 answers · 2 weeks ago
  • Is it possible to roll Roth IRA funds into an Annuity and have all of the annuity payment be tax free?

    Best answer: The idea of a Roth IRA is to invest post tax, keep it for a certain number of years and any capital gains are tax free. I hold an Inherited Roth IRA that is currently in an annuity. I get an annual payout and pay no taxes on it. And while my annuity pays 3.2% per year, it is considered one of the better rates.... show more
    Best answer: The idea of a Roth IRA is to invest post tax, keep it for a certain number of years and any capital gains are tax free. I hold an Inherited Roth IRA that is currently in an annuity. I get an annual payout and pay no taxes on it. And while my annuity pays 3.2% per year, it is considered one of the better rates. Since rates vary so much lately, you might best consult an accountant for further details.
    9 answers · 2 weeks ago
  • Do i still have a chance of recovering my lost money with this binary broker ?

    Best answer: Unless your "recovery agents" can catch up to the broker, expect nothing. And if you have been promised 100% recovery, you are being scammed again - no way the original scammer has left enough money in accessible accounts to get you full recovery. FINRA has issued the following warning about... show more
    Best answer: Unless your "recovery agents" can catch up to the broker, expect nothing. And if you have been promised 100% recovery, you are being scammed again - no way the original scammer has left enough money in accessible accounts to get you full recovery. FINRA has issued the following warning about "recovery" experts - http://www.finra.org/newsroom/2017/binar...
    7 answers · 1 week ago
  • Should We Sell Our Index Funds Before a Recession?

    Suppose you think a recession is coming up (I think one will happen soon personally). If you own a broad index fund, such as the Vanguard S&P 500 Index Fund (which Warren Buffet recommends!!!), would it be a good idea to sell it? Or, are index funds like this just things you hold for life (until retirement) and... show more
    Suppose you think a recession is coming up (I think one will happen soon personally). If you own a broad index fund, such as the Vanguard S&P 500 Index Fund (which Warren Buffet recommends!!!), would it be a good idea to sell it? Or, are index funds like this just things you hold for life (until retirement) and you never sell it even during recessions? If we are to hold it, is the logic that basically the stock market will rise again and over the very long-term you'll gain? Is that historically true? Like, if you bought an index fund in 1990 and held it until now, there's no way it'd ever lose value over time on average? I know with stocks they can lose value and companies can literally go extinct. But, are index funds guaranteed to always go up over time?
    9 answers · 2 weeks ago
  • Why are Nike stocks dropping like a rock?

    10 answers · 2 weeks ago
  • Robinhood taxes if i lose majority of the time?

    Getting into stock trading and what not. I’m using robinhood. Curious. What are the tax rules if i lose majority of the time????
    Getting into stock trading and what not. I’m using robinhood. Curious. What are the tax rules if i lose majority of the time????
    7 answers · 2 weeks ago
  • How do I earn $50000 in passive income.?

    I want to retire before age 50. I am 19 right now. I was thinking of divend stocks. Do divend stocks adjust with inflation? Can the stocks increase in value as the economy changes? What other methods are there to earn passive income.
    I want to retire before age 50. I am 19 right now. I was thinking of divend stocks. Do divend stocks adjust with inflation? Can the stocks increase in value as the economy changes? What other methods are there to earn passive income.
    18 answers · 2 weeks ago
  • Does a balance sheet always follow the exact same order? For example Assets: Current assets Investments Property etc.?

    Does it follow a certain order in which the assets, liabilities, stock equity should be ordered? To be more clear would investments always come before property? That's what I'm trying to get at when I mean (order). Thank you.
    Does it follow a certain order in which the assets, liabilities, stock equity should be ordered? To be more clear would investments always come before property? That's what I'm trying to get at when I mean (order). Thank you.
    5 answers · 2 weeks ago
  • Where to Put Money After Selling High on Stock?

    Hello - I am learning about investing. I have a question. People say to buy low and sell high. If I have a stock that I bought for $10 and two years later that same stock is $100 and I want to sell it, then where do I put the money? Let's say I think this is already as high as it will go, by the way. But,... show more
    Hello - I am learning about investing. I have a question. People say to buy low and sell high. If I have a stock that I bought for $10 and two years later that same stock is $100 and I want to sell it, then where do I put the money? Let's say I think this is already as high as it will go, by the way. But, now, I have to find another stock to put it in right? If I just keep it in cash, it will lose money to inflation. But, what if there is no other good stuck I can put that profit into?
    8 answers · 2 weeks ago
  • Is cryptocurrency a way to make a lot of money or a get rich quick scheme?

    Best answer: Ask the people who bought Bitcoin last year for over $20,000 each and it is currently worth about $7200.
    Best answer: Ask the people who bought Bitcoin last year for over $20,000 each and it is currently worth about $7200.
    11 answers · 3 weeks ago