No. of Recommendations: 0
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!
Print the post Back To Top
No. of Recommendations: 0
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.
Print the post Back To Top
No. of Recommendations: 0
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
Print the post Back To Top
No. of Recommendations: 0
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!
Print the post Back To Top
No. of Recommendations: 0
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.
Print the post Back To Top
No. of Recommendations: 0
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
Print the post Back To Top