Q&A: What’s the Difference Between Roth & Traditional IRAs for Investors? – Episode 967

Today’s first caller wants to set up a self-directed IRA to buy real estate. What’s the difference between Roth and traditional IRAs? That’s the first question I’m answering on today’s Q&A edition of Investing in Real Estate!

On this episode, I’m answering your great questions on types of IRAs for investors, the best way to utilize $35k in cash, and strategies for buying new assets without taking on additional mortgages. Tune into this episode to hear my answers to your best investing questions!

On this episode you’ll learn: 

• The differences between a Roth and a traditional IRA, & which is best for self-direction.
• How to best utilize cash reserves.
• Strategies for growing your real estate portfolio.

The Differences Between a Roth and a Traditional IRA, & Which Is Best for Self-Direction

There’s one main distinction between a Roth & traditional IRA, and that’s the way taxes are handled. In a Roth IRA, you contribute post-tax dollars, and your money grows tax free. A traditional IRA works conversely: the funds grow tax-deferred, and then you pay the taxes at withdrawal. I’m not a financial advisor, but I personally prefer the Roth because I plan to be in a higher tax bracket at retirement. I’m a fan of the Roth structure for self-directed IRAs.

How to Best Utilize Cash Reserves

Again, while I’m not a financial advisor, I could never recommend putting your money into a liability like a car. If I were in this position, I would consider putting some of that cash into real estate notes via Connect Invest. This would allow you to make some great returns in the short-term while deciding what your long-term financial goals are.

Strategies for Growing Your Real Estate Portfolio

If you have a lot of mortgage liability, I’d consider strategies for paying down your loan quickly. Check out my book, How to Pay Off Your Mortgage in 5 Years. Another thing to consider is that you may need to run the numbers on your existing rental to make sure you’re actually getting great returns. If not, you may consider selling it to buy additional, more profitable investments.

Ask Me a Question at morrisinvest.com/clayton

Episode Resources
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

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