3. Redelsheimer’s PowerPoints Inc. If you decide to save for retirement and put your money in an IRA, the government will give you a tax break What, the government is going to do you a favor? There must be a catch!
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5. Redelsheimer’s PowerPoints Inc. Investing into an IRA To give an example, I would like to talk to you about two families. The Joneses live here next door The Millers live here
6. Redelsheimer’s PowerPoints Inc. Investing into an IRA Richard Miller and Jim Jones each make $50,000 a year. The Millers The Joneses
7. Redelsheimer’s PowerPoints Inc. Investing into an IRA Both families are taxed in the 25% bracket. The Millers put $5,000 into their 401 K The Millers The Joneses $ 50,000 $ 50,000 $ 5,000 401 K - $12,500 Taxes $ 45,000 Taxable Income $ 37,500 Disposable Income - $ 11,250 Taxes $ 33,750 Disposable Income
8. Redelsheimer’s PowerPoints Inc. Now the Joneses want to keep up with the Millers, and invest $5,000, but they do so notin an IRA but a regular taxable saving account The Millers The Joneses $ 50,000 $ 50,000 $ 5,000 401 K - $12,500 Taxes $ 45,000 Taxable Income $ 37,500 Disposable Income - $ 11,250 Taxes $ 5,000 Regular Savings $ 33,750 Disposable Income $ 32,500 Disposable Income
9. Redelsheimer’s PowerPoints Inc. Which family comes out ahead? The Millers The Joneses $ 50,000 $ 50,000 $ 5,000 IRA - $12,500 Taxes $ 45,000 Taxable Income $ 37,500 Disposable Income - $ 11,250 Taxes $ 5,000 Regular Savings $ 33,750 Disposable Income $ 32,500 Disposable Income
13. Why would the Government be so kind and give a tax break to investors?
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15. Redelsheimer’s PowerPoints Inc. DO NOT, I REPEAT, DO NOT CASH OUT YOUR 401K WHEN YOU CHANGE JOBS (10% PENALTY PLUS TAXES) 401 K / 403 B
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17. Take out money tax free for education and your first house
18. Can take out your principal at any time without a penalty
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20. Redelsheimer’s PowerPoints Inc. Why Diversify? Now you diversify your $100,000 into 10 different investments The Odds are the same for each $10,000 50% chance of quadrupling, 50% chance of losing your money. Now assume ½ of your 10 investments double: ($10,000 X 4 = $40,000), and ½ of your investments lose all of their $$$. You have turned $100,000 into $200,000 by diversifying your money!!
