America, IRAs, and the Stock Market
Our problems are man-made, therefore they can be solved by man. - JFKWell as you know, Friday was the last day to make your annual contribution to an IRA. That was with out of pocket cash or rollover funds if you have recently left an employer's 401K plan. But don't fret -- you should now be thinking about your 2005 contribution, whose tax deduction cap the IRS is raising to $4,000. And one way to get an early start is with your tax refund -- get ready because they are coming.
Since 1926 -- the market has returned on average 10%. That is after three pivotal Wars, the Fall of Communism, the Asian crisis, and 9/11 -- The twentieth century saw a seismic shift in the way that vast numbers of people lived, as a result of technological, medical, social, ideological, and political innovations and paradigm shifts. Terms like ideology, world war, genocide, and nuclear war entered our lexicon and became an influence on the lives of everyday people. The trends of mechanization of goods and services and networks of global communication, which were begun in the 19th century, continued at an ever-increasing pace in the 20th. I am optimistic with regards to America's growth in the next century. Today, unemployment is at 5.2% -- inflation at 2.4% and GDP at 3.8% -- America is business partners with countires whose GDPs are clocking in at 6 - 8 % -- you know who they are. Give me that for ten years straight --I' ll take it.
Earning 10% average annual returns, last year's average tax refund -- $2,136 -- can grow to more than $25,000 in 25 years. If you have a bunch of old 401(k) accounts sitting idle with former employers, consider rolling them over and consolidating them into a single self-directed IRA. It is called a direct rollover and what it does for you is save money. Lots of money. Did you know that a premature distribution from a 401k gets triple taxed -- state /federal taxes + 10% penalty + 20% withholding. Its really ugly. You're job is to work smart and make the ulgy prettier.
<< Home