What is better than 1 Fully Funded Roth IRA???

2 Fully Funded Roth IRA's!!! I am getting married in March and I am getting ready to open a Roth IRA for my fiancee. I have already maxed mine out for 2010 and hope to get a big chunk in hers for 2010 from our tax returns!

For those of you that don't know what a Roth IRA is:

A Roth IRA is a retirement account that you contribute to with after tax dollars. Your taxes are removed from your paycheck automatically, so your money after taxes can be deposited into a Roth account.

The benefit of a Roth IRA is that you don't pay taxes again on the gains, assuming you withdraw them after 5 years and the age of 59 1/2. The contributions you made can be withdrew tax free at any time.

For Example:

2011: I deposit my maximum contribution of $5000 throughout the year. The balance at the end of the year is $5500. Rock on for a 10% gain first off!! I can then withdraw up to $5000 during 2012 with no penalty. The $500 can not be withdrawn until it has been 5 years or you turn 59 1/2.

There are a few exceptions to these rules, but for the sake of basic knowledge this works.

It is a great tool to invest for your future and a good starting point for those just starting out.

If you have any questions about a Roth IRA, do not hesitate to contact me directly.

I am not ready for Rule #1.

I speak so much about how my blog is for those that are intimidated by fancy words, equations, and concepts. Then I try to start off with Rule #1, which I am not ready for. I still want to try the Rule at some point, but I still need more basics. I apologize for getting too big for my britches and promise to take baby steps from now on!

HSBC Drops Rate Again!!

For the 2nd time in 6 weeks, HSBC has dropped their online savings account interest rate. It was dropped to .90% as of today. This comes on top of a drop to 1.0% on November 30th.

It is still better than a typical bank savings account of .30%, but you have to look around. Remember that online savings are a bit less liquid than a standard bank account. It takes 4 or 5 days to get it from an online account, as opposed to same day with a regular bank.

I have an account at BECU and it pays 6.17% for the first $500 and .50% for the rest.

You just have to consider how important it is to have money making .90% that is not completely liquid.

First Rule of Rule #1!!

I have to confess that I tried to shortcut Rule #1. I am still grasping the concept and tried to track a stock that met about 3 out of 5 rules. The results are a loss of $330 of my fake $10,000. I may need a bit more time of studying Rule #1 logic to start the practice.

This just goes to show that shortcuts and doing things halfway, never work out!

Book Review "Rule #1"

First off...I was a business major. There is a reason I stayed away from English classes with a 10 foot pole!! I figured I would at least give a little blurb each time I read a book that was relevant to this site.

Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!

This book is written by Phil Town. Phil is a former river rafting guide that learned from his mentor "The Wolf" how to pick stocks. He uses a whole lot of references to Benjamin Graham & Warren Buffett, which is an easy way to sound credible.

According to him, his Rule #1 investing comes down to 4 things:

1. Find a wonderful business
2. Know what it's worth as a business
3. Buy it at 50 percent off
4. Repeat until very rich

Ok..so it sounds quite easy and cheesy. A whole lot of books are written by people that claim to make us rich overnight. My question is: If it is so easy and only takes 15 minutes, why isn't everyone multi-millionaires.

I was and continue to be a bit skeptical. He basically breaks down, by statistics, some ways to come across businesses that are selling for less than they are worth. You then buy shares in this company and sell when they are over priced and buy again when they are under priced, etc. etc.

I went online and couldn't find anyone reliable that had tried the system. I was curious if it really works. So I am going to try it.

I don't want to exhaust you with all the details of the book without knowing how legit it really is.

I am going to do paper trading(not real money) for awhile and see what my results are. Stay Tuned!!

My Starting Point

I wanted to give you an idea of where we stand to start out this journey(As of 1/9/2011) :

Assets:

Cash Savings: $3,064
Roth IRA: $41,444
Combined 401K's: $2,242
Condo Value: $180,000
Total: $226,750

Liabilities:

Student Loans: $13,731 @ 3.625%
Mortgage: $181,284 @ 4.5%
Credit Cards: $1651(on interest free promotional accounts)
Total: $196,666

Net Worth(Assets - Liabilities):

$30,084


Two 30 somethings with a 5 year old and about to get married with a net worth barely above $30,000!! YIKES!!

We obviously need to step it up a notch in order to have money for college, retirement, food, water, air!!

I just finished reading a book called Pilgrimage to Warren Buffett's Omaha : A Hedge Fund Manager's Dispatches from Inside the Berkshire Hathaway Annual Meeting by Jeff Matthews. I realized that I want to be the next Warren Buffett. I love the idea of studying companies and management and deciding who I want to own. At this point, I am looking at owning small chunks(Shares)of companies, whereas Mr. Buffett buys the whole company. This is one guys journey, with limited starting resources, to become a successful and educated investor. I hope those that are overwhelmed by the terms IRA, 401K, Roth Ira, Dow Jones, and investing in general well see that anyone can learn and have fun growing wealth!