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SMART MONEY, A COLUMN BY BRUCE WILLIAMS

Roth IRA a good choice for young investor

Tuesday, January 8, 2013 - 12:01 am

Q.: I am married and 32 years old. My husband and I would like to open an IRA, but we are unsure which kind. I may be going back to school to obtain my pharmacy degree. Please explain the benefits of the Roth and traditional IRAs. – Reader, via email

A.: The major difference between a Roth IRA and a traditional IRA is that with a Roth, your contributions are not tax-deductible, but they have the potential to grow tax-free. With a traditional IRA, your contributions may be tax-deductible and can grow tax-deferred.

If you have a relatively modest income, you're far better off with the Roth, since you pay no taxes on any money earned on the investment.

Q.: My cousin and I own a house through a trust. I have my own house that my family and I live in, but my cousin and his family live in that house. To say they are pigs would be an understatement. The house needs so much work, but my cousin's not putting forth the effort or cash to get it in decent condition, and I have no extra money.

The attorneys have talked about renting out the house, but in its present condition, it is not rentable. We have talked about selling it, but just like everywhere else, the housing market is soft. – S.O., Missouri

A.: Unless your cousin would be willing to move out and absorb half the cost of fixing up this place, your next move should be to try to get this matter resolved through the courts. I

Send questions to bruce@brucewilliams.com or to Smart Money, PO Box 7150, Hudson, FL 34674.