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.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst Ra