Just want to make sure I have this right-Let's say I have $2000 in my Roth IRA and I buy 200 shares of a $9 stock (for simplicity). That's $1800 plus whatever fee my broker charges me. Now lets say that stock goes up to $18 the next week. So now I have roughly $3600 in my account (18 x 200). Let's say I sell the stock. I know I pay my broker's fee when I sell it, but am I right in saying I won't pay any capital gains tax on the money I made?Thanks in advance!
am I right in saying I won't pay any capital gains tax on the money I made?Yes, all capital gains in a Roth are tax free.
Andy,Thanks for asking the same question I was pondering all day. I have my first $2000 sitting in my money market waiting for my decision.I would like to buy stock in a good company that I hope will grow in value. Watching it I anticipate selling from time to time increasing my portfolio.What happens to the balance after that first purchase? It could be less then $100 left over. If you add that to the "kitty" for next year's $2000 addition does that mean you can buy more stock?Thank you Andy or studentinvestor1 or anyone with a thought.steve fooling in WI
What happens to the balance after that first purchase? It could be less then $100 left over. If you add that to the "kitty" for next year's $2000 addition does that mean you can buy more stock?I'm guessing you have your IRA with a broker, and that there's a set-up where your daily cash balance is swept into a money-market account when it hasn't been used to buy any stocks. If you buy stocks for $1960 (including comission) and still have $40 left, that $40 will be swept into the money-market account. The stocks as well as the $40 are all still part of your IRA. If you don't do any additional buying or selling and you add $2000 next year, you will have $2040 with which you are able to buy stocks within your IRA (plus interest on the $40 which you earned from it being in the money market account all that time).I hope this helps!
You don't pay any capital gains or any taxes while you're in the IRA. With a Roth, you don't pay anything when you get out, either. With a regular IRA, you don't pay anything until you start taking the money out.
Thank you guys for replying. It was a simple question but one that I couldn't find an answer to quickly. This board is amazing.Good luck to everyone!!Steve
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