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    Here begins your journey into the mind of everybody's favorite asian, and I don't mean Jet Li.
What follows is the somewhat inane, mostly irrelevant, and self-important ramblings of a man on the brink of madness.
Welcome... to the Chu.

Friday, March 10, 2006
 Random Acts of Finance    [L]

At the advice of my financial consultant, I opened up a Roth-IRA account yesterday. It sounds like a really good deal, you can contribute up to $4k post-tax money per year, which can be used just like any other investment account, on mutual funds, short-term stocks, and whatnot. I guess the only downsides to them are the occasions where you would have paid less taxes, such as 1) if you lose a lot of money or 2) the government decides to do away with our random, arbitrary, and confiscatory tax laws. Seeing as how (1) is exceedingly pessimistic and (2) has an odds of happening less than most lotteries, I think it's a pretty safe way to play the game.

Talk about Roth-IRAs in the comments.

I have a Roth that I contributed $4k to last year. I also have a fairly large Traditional IRA that was the result of an 401k rollover. I am going to start rolling that Trad IRA into my Roth this year. Since that is pre-tax, when I roll it over, I will be forced to pay taxes on what I roll over into the Roth.

The benefit of getting hit now with the taxes of rolling over, is that over time, inflation will cause the taxes I'll have to pay to be far more hefty than they would be now.

The goal of investing is to get out from under the tax arm of the government. The Roth is a perfect way to do that. All other common retirement investments have a tax penalty associated with them, somewhere down the line.

Another investment I'm experimenting with is I-Bonds through the US Treasury. They have a fairly high rate of return (around 6.xx%) and are protected against inflation. It definitely beats my CD which is barely scraping in 3.5%.

By Blogger Joel, at 3/10/2006 11:11:00 AM      

I need to probably meet with a financial guy just to hear what he has to say. Who did you go with?

By Anonymous Jeff, at 3/14/2006 09:19:00 AM      

Don't think about tomorrow - when you still owe from yesterday.

If you're in any sort of debt (though I'm not talking car payment), do not invest. Money Management 101.

By Blogger BiggMikeDee, at 3/15/2006 10:12:00 AM      

No doubt Mike, but I already had some money invested in mutal funds, or wouldn't have donated otherwise.

Then again, the average annual earnings on some of the funds I picked are well north of my credit card apr. Maybe I should hedge my bets? :)

By Blogger Chu, at 3/15/2006 11:01:00 AM      


My comment was not geared toward you, Chu - but just a general investment precaution.

By Blogger BiggMikeDee, at 3/15/2006 11:36:00 AM      

^^^ speak up ^^^