No. of Recommendations: 3
If you put your money into paying off the debt, you lose out on $4000 of IRA contributions. In 2 months you put $4000 into stocks or a tax-managed mutual fund. Assume you will sell in 40 years and you earn 7% CAGR on your stocks, the stocks will be worth around $60,000, leaving you with a capital gain of 56,000, taxed at 20%. That's $11200 it'll cost you.

But their AGI is over $160,000 so this is a traditional non-deductible IRA, not a Roth. In 40 years they are likely to be in a 30% tax bracket, the $56,000 will be taxed at $16,800. The tax-managed fund wins, hands-down.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.