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PERSONAL INVESTING OPTIONS

Learn about Roth IRA, annuities, and 401k plans for personal investing. Explore the benefits, contribution limits, and taxation of each option. Analyze the best choice based on your financial goals and circumstances. Study case scenarios with investment and taxation sensitivity analysis.

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PERSONAL INVESTING OPTIONS

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  1. PERSONAL INVESTING OPTIONS Team Members: Mauricio Coto - Organizer Michael Thompson - Summarizer Saurabh Desai - Techie Farouq Mahadin - Techie

  2. PERSONAL INVESTING OPTIONS • ROTH IRA • ANNUITIES • 401K

  3. ROTH IRA • Individual Retirement Account • Uses after-tax contributions • Grows tax free • $3,000 limit in 2003

  4. Annuities • Insurance agrees to make periodic payments after the person retires • Uses after-tax contributions • Tax deferred until withdrawal • Taxes paid on benefits only • Unlimited Contributions

  5. 401K • Retirement savings plan funded by employee contributions • Often employee matched • Tax deductible • Tax deferred until withdrawal • $13,000 limit in 2003

  6. CHOICES

  7. GOAL • What is the Best Choice? • Taxes NOW or taxes LATER?

  8. Study Case • 25 yr. Old single male • 35 years till retirement (retire at 60) • 54K beginning salary + 2% per year • Marries at 30 • ROR decreases closer to retirement • 3% Inflation

  9. TAXES NOW OR TAXES LATER VS.

  10. CALCULATION END RESULTS

  11. INVESTMENT & TAXATION

  12. SENSITIVITY ANALYSIS

  13. INCREMENTAL INVESTMENT

  14. CONSTANT INVESTMENTS

  15. NUMBER OF YEARS INVESTING (1)

  16. NUMBER OF YEARS INVESTING (2)

  17. VARYING AGI

  18. CONSTANT ROR

  19. OVERALL TAXES PAID

  20. VARIABLE ROR

  21. OVERALL TAXES PAID (VARIABLE ROR)

  22. WHERE TO INVEST??? ANNUITIES ROTH IRA 401K

  23. QUESTIONS ???

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