If you’ve been around me for awhile, you know that I LOVE ‘truly’ self-directed Roth IRAs. Why? Because in addition to letting you invest in all kinds of vehicles outside of the typical retirement portfolio, the gains are TAX FREE!!!
Sure you don’t get a tax write-off on the contributions, but you get to keep what you earn without the government taking a hefty double-digit percentage. And that my friend is pretty dang cool.
It’s the difference between paying tax on the seed or the harvest.
It’s a NO-BRAINER!
Anyway…so I don’t know if you knew this, but I have a new niece. Actually it’s my first and only niece. She’s really cute. I kinda like her.
So in order to 100% guarantee that I’m going to be her favorite uncle of all-time, I might just set her up a Roth IRA.
Why?
Let’s do some quick math.
She’s 1 year old now. Say I put in $5000 once and I never contribute again.
In 60 years, at a modest 10% interest (which honestly is pretty conservative), that $5000 investment becomes $1,522,408.20.
Yes…over 1.5 million buckaroos. And that’s assuming one single contribution.
(She better contribute when she’s older too though or I’ll be pee-ode.)
NOT TOO BAD RIGHT!
Yes, with one fell swoop I’ve just ensured that I get a Christmas card and Awesome Status for the rest of my life 
Now is there some red tape? Yeah sure but it’s really not that bad. The child has to have an income to be eligible for a Roth and that’s fine – FIND something to pay them for. It’s not that hard.
- Hire the kid for a Indy movie role
- Pay them for photographs for a marketing promotion
- Be creative (but legal!)
A couple other technical points: they can’t contribute into the IRA more than they make. You’ll also probably want to file a tax return, even if they’re under the required income limits (check with the ol’ CPA on this one).
Pretty awesome huh!?
Now think about this and get ready to have your mind blown…
What if you did this for all your kids and taught them to do the same for each generation to come?
With one smart generation, you could change the family tree.
Little things like this are how families become wealthy. We’ll talk about more “tricks of the rich” in future articles.
In the meantime, just make sure you give uncle Jason credit for this one when the time is due. And if you want to kick back a part of the profits feel free too �?�
Tags: family wealth / IRA investing / Roth IRA / Set up your kids