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URL:  http://boards.fool.com/i-just-noticed-that-if-you-make-over-a-certain-23898895.aspx

Subject:  Re: Convince me to put money into a ROTH Date:  3/28/2006  8:22 PM
Author:  2gifts Number:  50772 of 75340

I just noticed that if you make over a certain amount of money that you are ineligible for ROTH accounts. I do not currently, but plan on making more money that allowed for a ROTH account. Would it be foolish to invest now if I will not be allowed to contribute within a couple of years?


I think they call this counting your chickens before they hatch.

We all plan to make more money. Sometimes it happens, and sometimes it doesn't, but it's silly to throw away perfectly good saving and investing opportunities because you might make more some day. 'Some day' has nothing to do with today.

I can tell you that I've made more than the allowable income since before Roth's were introduced. That said, in the 2 years in which I did not work a full year, I made enough less that I was eligible, so in those years, both DH and I contributed.

I figure that anything I can save is that much closer to the goal. I see no point to throwing away a good opportunity because I might not be able to contribute every year. Once the money is in and contributed, it stays there. You don't have to take it out because you're over the limit in another year. You just don't contribute that much.

I've been watching your posts, and I think you need to step back and look at the whole picture. You've been able to buy real estate at a young age, and you think that means that other investments aren't as good. That may or may not be true, but I sure wouldn't keep all my eggs in oen basket.

You also seem to think that real estate only goes up. It goes down as well, and some of us have lived through those cycles multiple times.

Over the long haul, real estate does appreciate, but it tends to be a low average like 4 or 5%. Our first rental property actually quadrupled in value in the first 4 years we owned it. Had we sold at that point, it would have been a great gain, but we liked the positive cash flow, and kept it for another 12 years. Since it effectively stayed at that same valuation all that time, the actual return over the number or years we owned it was a much lower number even though it had quadrupled.

You're young, and you have time on your side. Use it to invest and use it to learn.
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