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Subject:  Re: Traditional vs. Rollover IRA's? Date:  4/13/2002  3:15 AM
Author:  jrhii Number:  34189 of 100089

If you have more than 4% of your total portfolio in that one stock, you'd be best to do anything you can do diversify. Yesterday. Think Enron.

Hmmm... I don't agree with that kind of philosophy... that would mean owning more than 25 stocks. Keeping up with the 8 I currently own is enough work, thank-you-very-much.

I also don't have more than 10% of my net worth in any one stock, so I'm not too worried about needing to diworsify...

I'm not sure what you mean by a "rollover IRA."

Read up on IRAs then. There are many types. Most banks/brokerages have Rollover IRAs and Traditional IRAs and Roth IRAs and SIMPLE, and SEP, and... and ... and ...

What is harder to find out is some of the details. I was hoping someone here could answer, but come Monday I can always call someone and find out.

It's called "compounding." By not utilizing that type of savings and tax opportunity, you're just throwing money away. And for the record, there are a lot of people in the world who struggle and sacrifice to save enough to put those "little $2-3k/yr" contributions in their retirement.

It's more complicated than that, and the benefits of an IRA vs. 401k are subtle. I've chosen so far to ignore the IRA in favor of the 401k (which has much higher contribution limits). That doesn't mean there is anything wrong with using an IRA. But a 2k limit vs. 10k limit is pretty significant. Sure I could do both, but I generally don't even max out of the 401k year to year.

I'm pretty confident I'll have more than enough money when I'm 59.5, and I suspect I might want more flexibilty when I'm not so old. As long as my retirement accounts are funded enough that I'm safe, the rest I'd rather invest more accessibly so that I can use it for any number of options beyond just buying stocks... maybe I decide to start a business & need some capitol; maybe I decide to pick up a rental property... or maybe I decide to enjoy some things in life with some of the money between now and 59.5...

So yes, I've choosen to "leave some money on the table" in terms of the tax advantages to afford myself more options today.

A friend of mine and I used to debate this with our co-workers, but in general I'd rather not live in a cardboard box until I can afford to live in a castle. I'd rather give up a little in the future to enjoy a few pleasures in life today as well. This requires a little care and could easily be done to excess. But within reason I don't think there is anything wrong with enjoying the first 59.5 years of my life.

Now in actuality I'm saving/investing more in my ordinary brokerage account than I am anywhere else right now. So I am still "giving up" a lot now for the future, but I see that future as closer than 32 years away.


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