ACHIEVING FINANCIAL FREEDOM AND GENERATIONAL WEALTH – WITH: 401-K; IRA; ROTH IRA!
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
LET’S GET ER STARTED – ACHIEVING FINANCIAL FREEDOM AND GENERATIONAL WEALTH – WITH: 401-K; IRA; ROTH IRA!
SMART Americans invest in the stock market to achieve Financial Freedom and create Generational Wealth. First and key they identfy companies whose value (determined after doing their homework) will increase over time. ALWAYS focus your analysis/attention on the company, NOT the stock.
LOOK FOR:
- GREAT products and services? [Apple, etc.]
- MULTIPLE income streams? {Amazon, etc.}
- COMPETENT leaders {Microsoft, etc.}
THE STOCK MARKET TEACHES FUNDAMENTALS OF INVESTING
Your lessons learned transfer to other types of investments. The fundamentals to good stock investing are similar to other types of investing, such as real estate, bonds, precious metals, etc.
INVESTMENT TOOLS TO GAIN YOUR FINANCIAL FREEDOM AND BUILD GENERATIONAL WEALTH
401-K PLAN
If your employer offers a 401(k), you start investing through a direct deduction from your paycheck. You save money on taxes for every dollar you add to your account, and the compounding of your money is impervious to taxes while the money is sitting in there. That’s a two-base hit! Recognize sometimes the values of your investments go down. But the 401K is a long-term investing strategy. Look at the S&P 500 chart below. Over ten years, investing in an S&P 500 ETF (which holds 500 of the U.S. largest companies) generated an annual return of 22 percent. Your job {SHOULD YOU ACCEPT IT} add before tax dollars (saving you tax dollars) into this account every pay period. Your money grows TAX-FREE until you eventually start to withdraw, typically after retiring. In many cases, your employer matches a percentage of your contributions. As Jimmy JJ Walker says, “IT’S FREE” MONEY!
You leave the investments in the 401(k) until at least age 59.5 (or pay a 10% penalty for taking it out early), and you pay taxes at your household tax rate when you take the money out.
Fidelity Investment (one of several investment firms) reported at the end of 2021; it had over 442,000 401K millionaires! Join the club.
DEMONSTRATING THE VALUE OF A 401K
Trumpton Bowden starts his 401K at 25 years of age with ZERO 401K savings. Based on the below assumptions, at the age of 55, he contributed ~$356,817.00 of his own money and has a total of $2,373,599.00 – achieving his FINANCIAL FREEDOM!
ASSUMPTIONS
- Currently Saved: ZERO
- Monthly Salary: 6,250.00
- Annual Salary Raise (%): Three Percent
- Contribution (%): Ten Percent
- Employer Match (%): Four Percent
- Return Rate (%): Ten Percent
- Years Until Retire: 30
RESULTS
- Employee Contribution: $356,815.62
- Employer Match: $142,726.25
- investment Gain: $1,874,056.99
- Amount at Retirement: $2,373,598.85
IRA
Traditional IRA contributions are not limited by how much you make annually, meaning that anyone with an earned income is eligible to participate. Your contribution may not be fully deductible based on your household income. An individual retirement arrangement is similar to the 401(k), except your employer does not provide this type of account. You save taxes on every dollar you add, and your IRA contributions and gains grow tax-free as the investments grow. You can trade stocks, mutual funds, or exchange-traded funds in an IRA and pay ZERO taxes on any gains.
The maximum total annual contribution for all your IRAs (Traditional and Roth) combined is:
- $6,000 (for 2021) and $6,000 (for 2022) if you’re under age 50
- $7,000 (for 2021) and $7,000 (for 2022) if you’re age 50 or older
The deadline to make a Traditional IRA contribution for the 2021 tax year is April 15, 2022.
Go ahead – GET STARTED!
ROTH IRA
The ability to contribute to a ROTH IRA is also subject to income limits. The GREAT news is that your investments grow tax-free, including when you start withdrawing money.Worth repeating – YOU NEVER OWE ANOTHER DIME OF TAXES!
Any dollars remaining in your Roth IRA can be passed to your beneficiaries, which can also withdraw from the Roth IRA tax-free. Tax-free generational wealth! Shout, Hallelujah, PEOPLE!
WHO INVESTS IN THE STOCK MARKET?
| Demographic | Percentage Investing in Stock Market |
| White Men | 77% |
| White Women | 66% |
| Hispanic Women | 52% |
| Black Women | 41% |
| Black Households | 33% |
Black households are lagging. Utilize the above investment strategies to achieve Financial Freedom and build generational wealth.
CONCLUSION
The first step to earning your financial freedom is to become more familiar with investing, such as, learning basic ideas about how the financial markets behave and how the main tools of investing function. In addition, learn about yourself to figure out what kind of investing strategies and techniques you are comfortable with over the long term.
I am an African American, {Black, Permeant Beautiful Tan, pick one) investor. Good and bad investments do not care about my skin color. Successful investing is correlatted with my competencies. Any money I lost; {Just ask my wife about that money. What a memory!} I blame myself!
GET TO WORK AND SHOW ME THE MONEY!
LET’S MAKE SOME MONEY – CRYPTOCURRENCY IS ACCEPTED!
YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE! – SOME CHARITIES I SUPPORT
St Jude Hospital: https://www.stjude.org/
Wounded Warrior Project: https://www.woundedwarriorproject.org
Folds of Honor: https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: https://wcnkas.org
TRUST ME – YOU WILL LIKE THE BELOW BLOGS!
BUILDING FINANCIAL FREEDOM/LEGACY TEN DOLLARS AT A TIME!
THE ROTH IRA IS SO GOOD. THE FEDS MADE A MISTAKE!
https://wealthbuildingpowers.com/2020/01/13/the-roth-ira-is-so-good-the-feds-made-a-mistake/
A ROTH IRA WILL IGNITE THE ENGINE FOR YOUR KID’S FINANCIAL FREEDOM
A ROTH IRA WILL IGNITE THE ENGINE FOR YOUR KIDS FINANCIAL FREEDOM
KEEP IT SIMPLE STUPID {KISS} – THE S&P 500 ETF INDEX
KEEP IT SIMPLE STUPID {KISS} – THE S&P 500 ETF INDEX
COMPOUND INTEREST IS THE EASIEST WAY TO DOUBLE OR TRIPLE YOUR MONEY
COMPOUND INTEREST IS THE EASIEST WAY TO DOUBLE OR TRIPLE YOUR MONEY
WARREN BUFFETT UTILIZED COMPOUND INTEREST TO BECOME THE 3RD RICHEST MAN ON THE PLANET!
WARREN BUFFETT UTILIZED COMPOUND INTEREST TO BECOME THE 3RD RICHEST MAN ON THE PLANET!
RETIREMENT PLANS OTHER THAN THE 401-K TO GENERATE > $1 MILLION PORTFOLIO!
RETIREMENT PLANS OTHER THAN THE 401-K TO GENERATE > $1 MILLION PORTFOLIO!
DO YOU WANT TO JOIN THE 401K PLAN MILLIONAIRE CLUB? {KINDA OF LIKE THE MILE HIGH CLUB – BUT A LOT LONGER LASTING!}
401-K YEAR-END SALE!
TURNING YOUR STIMULUS CHECK INTO MILLIONS $$$$!
https://wealthbuildingpowers.com/2021/03/22/turning-your-stimulus-check-into-financial-freedom/
SO YOU GOT A HUGE TAX REFUND – NOW WHAT?
SO YOU GOT A HUGE TAX REFUND – NOW WHAT?
YOUR BIGGEST RISK TODAY – A LONG LIFE!
YOUR BIGGEST RISK TODAY – A LONG LIFE!
INVESTING IN STOCKS IS COLOR BLIND – WHAT IS STOPPING YOU?
INVESTING IN STOCKS IS COLOR BLIND – WHAT IS STOPPING YOU?
FINANCIAL LITERACY IS JUST NOT THAT COMPLICATED – TRUST ME!
https://wealthbuildingpowers.com/2019/04/01/financial-literacy-is-just-not-that-complicated-trust-me/
THE NEED FOR EMERGENCY SAVINGS – MORE IMPORTANT TODAY THAN EVER!
THE NEED FOR EMERGENCY SAVINGS – MORE IMPORTANT TODAY THAN EVER!
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
