Roth IRA questions..

[SubaruSTiMike]

Hey guys, I'm thinking about putting money into a Roth IRA account, I know I can't take out the money until I'm 60, and I can only put a max of 4,000 dollars. Is that a max of 4000 a year? And every year I can put in 4k? Also, does the money that I contribute have to come from a job and the moeny is already taxed? Thanks. How many percent yield does the Roth IRA give? I keep hearing "if you put in 4k now, you can have a million in 50 years " (granted a million in 50 years probably won't be as much because of inflation). DOes this statement mean people put in 4k in their Roth IRA and let it sit and grow without putitng more in?

[The4Aces]

You need to put 4k in everyyear. roth IRA is AFTER tax money. This also means you wont have to pay tax on it when you withdraw. Also I THINK you can withdraw whatever you put in whenever you want... you just cant withdraw the gains. But i recomend to just keep it all in their. As it is a good opprotunity to compound tax free.

[En Passant]

You cannot deposit money that you have made from poker, correct?

[Chrisman886]

Money deposited in a roth IRA needs to be "earned income." Gambling winnings, lottery winnings, capital gains, amongst other things, are not "earned income."

[SlowHabit]

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You cannot deposit money that you have made from poker, correct?

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Yes you can. As long as you pay taxes on it.

[Chrisman886]

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You cannot deposit money that you have made from poker, correct?

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Yes you can. As long as you pay taxes on it.

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You're right, you can deposit money even if you have $0 earned income, but you will be penalized heavily. I believe something like 6%.

[prohornblower]

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I know I can't take out the money until I'm 60, and I keep hearing "if you put in 4k now, you can have a million in 50 years "

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Wrong. You can take out Roth IRA CONTRIBUTIONS at any time, for any reason, tax and penalty-free. You just can't take out the gains without paying fees.

Also, I don't know how old you are, but if you are around 20 and put $4K in every year for the next 4 years, and never touch it again, you should easily have $1M by your early sixties.

[SubaruSTiMike]

yes i am exactly 20, and thanks a lot for the help prohorn and everyone who responded, i really appreciate it. I will definitely put some of my assets into a Roth IRA, I talked to a friend of mine who is in an investing mind set and he suggests, since I'm pretty young anyways, I should put in 40% of my assets into an aggressive investment and 20 into a semi aggressive and 20 into a long term investment. Although I don't have a lot of money as of right now since I'm a losing player, I will get some money from summer jobs and such. I'll put in like 40 percent into stocks and if i get big baller enough think of a way to do real estate, and 20 percent into money market/etf's and 20 into IRA's.

[gull]

Why do you think aggressive and long term are different?

I would recommend using primarily index funds to invest.

[SubaruSTiMike]

Well, I think it's basically just the risk factor/return you know? yeah you can put all your eggs in one basket but I want to diversify because isn't that important? I don't know, I'm new at this.