mathjak107
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 27, 2005
- Messages
- 6,208
to get 5k in a roth take about 6200 hypothetically in pretax dollars .
if that roth doubled tax free you have 10k tax free
however if i bought the same investment in that traditional account i would have the full 6200 working
if the 6200 doubled i have 12,400 less taxes is 10k .
so the tax effect really isn’t ever gone ….it just is buried in the actual cost of that roth and forgotten about since it vanishes in our minds from the original number involved.
but that tax effect is always there ,we just tend to view it in our minds once the taxes are paid up front and forgotten about.
hypothetically you just could have had more working for you if it wasn’t a roth but a traditional
there are other reasons a roth can be beneficial but this tax effect is always there whether we recognize it or not
a roth vs a taxable account would be a different issue as well since the price of admission to both is the same price and the roth saves on those future taxes
so there are different situations here… but in all cases there are taxes to deal with either in advance or after..there ain’t no free lunch where an investment is tax free unless it fits in the zero capital gains bracket.
or i can have an investment like my berkshire in my taxable account and the kids inherit it tax free
otherwise everything is effected by taxes up front or after either effecting our future balance or current one
if that roth doubled tax free you have 10k tax free
however if i bought the same investment in that traditional account i would have the full 6200 working
if the 6200 doubled i have 12,400 less taxes is 10k .
so the tax effect really isn’t ever gone ….it just is buried in the actual cost of that roth and forgotten about since it vanishes in our minds from the original number involved.
but that tax effect is always there ,we just tend to view it in our minds once the taxes are paid up front and forgotten about.
hypothetically you just could have had more working for you if it wasn’t a roth but a traditional
there are other reasons a roth can be beneficial but this tax effect is always there whether we recognize it or not
a roth vs a taxable account would be a different issue as well since the price of admission to both is the same price and the roth saves on those future taxes
so there are different situations here… but in all cases there are taxes to deal with either in advance or after..there ain’t no free lunch where an investment is tax free unless it fits in the zero capital gains bracket.
or i can have an investment like my berkshire in my taxable account and the kids inherit it tax free
otherwise everything is effected by taxes up front or after either effecting our future balance or current one
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