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5 Roth IRA rules you NEED to know (before opening an account) - YouTube
Channel: Wealth Hacker - Jeff Rose
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the Roth IRA is the greatest thing since
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sliced bread
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and yes I'm even talking to you Little
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Caesars Little Caesars delivery best
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thing since sliced bread
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I know seriously though I love the Roth
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IRA I talk about it all the time I mean
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like all the time maybe not all the time
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but a lot of the time when I get
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comments like this one from a Johnny G
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that says I have a Roth IRA with the
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credit union but seems like they are not
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investing my money in anything since I
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haven't earned any interest in the last
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two years how do I get them to invest
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hey Johnny G one first thanks for
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watching the videos - for commenting I'm
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assuming you are a subscriber awesome
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for watching this and you're not a
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subscriber yet now is that opportunity
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go ahead and do that but comments like
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Johnny G are not isolated I get a lot of
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them concerning the Roth IRA which makes
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me assume that many of you still don't
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understand how awesome the Roth IRA is
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so if that is the case well this is what
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we were talking about today I'm going to
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give you an introduction on the five
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absolute things that you need to know
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before you start investing in a Roth IRA
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but before we get started something
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seems off oh I know what it is
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Alexa it's time to get wealthy there we
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go it's all right welcome to wealth
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hacker labs my name is Jeff rose and yes
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we are talking about the Roth IRA and
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what not a better way to hack your
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wealth and getting tax-free money if you
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want more information on the Roth IRA
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that I don't provide in this video you
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can also check out another video where I
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talk about the Roth IRA millionaire I
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also have a lot of content on my blog
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good financial cents about anything
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everything that you need to know about
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the Roth IRA right the first thing that
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you need to know is how much can you put
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in so for 2020 the most that you can
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contribute to a Roth IRA is $6,000
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unless you over the age of 50
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and that means you can put an extra 1000
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for $7000 total now many of you already
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know that and that's great but the one
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thing that people tend to get confused
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on is how much can you put in the Roth
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IRA if you have multiple Roth IRAs so
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let's say for example you want to open
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up a Roth IRA at Robin Hood oh wait my
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bad Robin Hood doesn't offer Roth IRAs
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why why do you not offer Roth IRAs yet
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okay we won't use Robin Hood as an
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example but let's look at M one finance
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let's say that you want to put $3,000 in
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M one finance could you then go and open
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up a Roth IRA at betterment and put an
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extra six thousand no but there is a way
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you can put more in if you meet a
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certain criteria which will get to a
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point number two but anyway I hope that
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makes sense to where it's six thousand
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dollars total total so that is not at
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each custodian or each investment firm
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investment broker investment app it is
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six thousand dollars total have I beat
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this into your head enough six thousand
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dollars total alright number two do it
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for the wife and kids okay so I
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mentioned earlier you could put more
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than six thousand dollars in if you meet
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a certain criteria well that criteria is
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if you have a spouse even if your spouse
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isn't working so long as you have enough
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earned income w-2 wage is basically
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showing the IRS that you make some money
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and you make more than $12,000 per year
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gosh I hope that you do because if you
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don't and you have a spouse then I'm
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sorry boys but you probably gonna be
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with you very long you need a job but as
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long as you make twelve thousand dollars
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so the max for both you and your spouse
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then you could open up what's called a
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spousal Roth IRA for her or him but this
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only applies if it is your spouse this
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doesn't work if it's your girlfriend
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this doesn't work if it's your fiancee
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so if you have someone that you haven't
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committed to yet well as Beyonce says
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it's time to put a ring on it
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[Music]
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put a ring on it another cool thing that
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you could do if you have kids and they
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have earned income is open up a
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custodial Roth IRA basically a Roth IRA
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for your kids once again this has to be
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earned income so lawn mowing money
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babysitting money all of this stuff that
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is paid under the table that is paid in
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cash like if it's not reported to the
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IRS then it doesn't work and this is
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something I've been able to do with my
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kids because guess what I have employed
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them so they are actually employees of
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the business helping out with you know
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filing and shredding and also a lot of
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our social media promotion so I've been
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able to open up a Roth IRA for them now
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this really doesn't help me out but it
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is going to help them out have a huge
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amount of tax free money waiting for
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them can we go ahead and take a minute
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and acknowledge how awesome their dad is
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I mean can't wait we should all right
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moving on to number three and number
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three is getting phased out and this is
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docked I'm not getting phased out with
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your career we're getting phased out and
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not getting picked for kickball cuz
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that's never fun not getting picked for
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kickball not like that never happened to
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me before because I what I mean just
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because I always got out I mean without
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a liability I don't know I should have
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been kicked for kickball are we talking
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about again oh yeah sorry just had some
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childhood stuff come up essentially what
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the IRS is saying here is that when you
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make too much money when you have
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hashtag rich people problems you can't
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participate in the Roth IRA I'm really
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rich so what are these phase-out limits
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so if you are single and if you're
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making more than one hundred and thirty
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nine thousand dollars a year or if
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you're married filing joint and you make
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two hundred and six thousand dollars a
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year then guess what you can't play with
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the Roth IRA and once again that's one
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of those may be good people problems to
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have but there are two different ways
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that you can get around this and still
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participate the first way that you can
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still participate is actually pretty
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simple is that if you are making 401k
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contributions those are tax deductible
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so that will decrease your income
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therefore decreasing what your
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modified adjust gross income is if
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you've ever seen the initials of
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modified adjusted gross income it says
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ma GI Maggie or I always think it looks
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like Magua or Mogwai you know from that
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movie gremlins those things were just so
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cute this little mug wise is mo things
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you like it
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so listed that you're single making 139
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thousand dollars a year but you were
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able to put in ten thousand dollars into
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your 401k guess what you can also then
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put in to the Roth IRA so we got some
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pre-tax money over here we got our
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tax-free money over here I mean that's a
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good thing to celebrate all right the
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second way that you can participate if
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you make too much money and have those
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rich people problems is doing what's
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called the backdoor Roth IRA now back in
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the day this was one of those really
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secret type things that only rich people
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knew about and but now like everybody
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knows about in this would not that much
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of a secret so I don't know why the IRS
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still makes it feel like it's a secret
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but essentially what you're doing is
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opening up a non-deductible IRA
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so you're opening up a traditional IRA
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you don't get any tax deduction and then
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you could do a Roth IRA conversion going
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straight into that Roth IRA money now
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there are some tax complications that
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could exist with this and if you're not
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sure what those are be sure to check out
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my other video it's actually a wealth
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board video this thing over here where I
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talk about the Roth IRA conversion in
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great detail it is something that you
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can take advantage of and really there
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are no income restrictions or
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limitations is something that I took
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advantage of many many years ago and it
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worked out very well for me once again
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check out that video if you want to know
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more about it but the gist is is that
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you can still play with the Roth IRA
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even with those rich people problems
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moving on to number four number four
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we're talking about contributions or the
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money that you put in and this is one of
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those things as a former financial
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advisor I really didn't like to tell my
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clients because I feel like it just gave
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him a free pass to take the money
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anytime they wanted but many people
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don't realize this about the Roth and
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this is just another reason why I love
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it so anytime you put money in all the
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money that you put in you have access to
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at any time I am going to repeat myself
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so that you heard that listen all the
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money that you put into the Roth IRA you
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can take out at any time you put it in
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you take it out you put it in you take
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it out yes yes yes you have access to
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your contributions or the money that you
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put in at any time
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it's the earnings that has to stay there
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until retirement so what that means is
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let's say you've got $100 and you invest
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it and it turns into $100
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well the $100 you put in you can take
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out it's this money that has to stay
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until retirement does that make sense I
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hope so
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now there is one stipulation if you put
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$100 in and you put it into a really bad
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investment say a bad stock pick or a
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crappy mutual fund and all of a sudden
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that $100 investment gets cut in half oh
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no you can't take your $100 back because
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it's not worth 100 anymore you can only
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take back what it's worth I totally just
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ripped up a hundred dollar bill for this
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video I mean this is what you do for
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YouTube I mean if this doesn't get me a
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like I don't know what does I gotta get
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some scotch tape if I said it before and
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I'll say it again you're crazy all right
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with number five we're going back to
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Johnny G here and with his credit union
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Roth IRA dilemma and what we're talking
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about here is how or what do you invest
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inside the raw but just to help you
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fully understand how this works I'm
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going to incorporate some props so that
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it really sinks in alright welcome to my
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daughter's bedroom and for this
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illustration I've got some of her props
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so that you can understand all right so
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Johnny G he's talking about his Roth IRA
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at the credit union that's not making
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any interest so the one thing that you
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need to remember is that the Roth IRA is
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an investment vehicle just like this
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pink Volkswagen this pink Barbie car and
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as the investment vehicle you can decide
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which investment or which passengers go
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inside this Roth IRA via
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you ultimately have that decision you
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have that say so that means that if you
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want to put individual stocks if you
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want to put individual bonds if you want
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to put mutual funds or ETFs then you
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have that ultimate choice you can decide
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what passengers go inside that Roth IRA
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vehicle but in Johnny G's case he has
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gone to a credit union and what it
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sounds like and I see this all the time
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is that many credit unions small banks
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regional banks may not offer traditional
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investments like mutual funds individual
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stocks etc so when you open up a Roth
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IRA they're all you're going to get
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access to to put inside your Roth IRA
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vehicle or CDs or a money market or
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savings and when you're not and right
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now as you know savings accounts are
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paying next to nothing so if you've had
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your Roth IRA at a credit union that
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doesn't offer traditional investments
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then you're only making what interest is
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paying and that's what it sounds like is
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why Johnny G needs to move his Roth area
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somewhere else and start making some
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real money all kidding aside do you have
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a Roth IRA because if you want to be
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like Barbie
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it has nothing to do with the Roth IRA
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anyway no seriously though the Roth IRA
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is one of the greatest investment tools
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and if you don't have it in your tool
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belt or your toolbox then you're missing
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out you truly are and I hope that this
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was informational you know with all the
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kids props and all the information I
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share to Lisa
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entice you to start or open a Roth IRA
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if you're not sure where to start or
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where to start investing your money with
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the Roth well let me just give you
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another reason to subscribe because I've
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got another video where I'm going to
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break down some of the best places to
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start a Roth IRA if you are a beginner
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that video is coming up but you're only
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going to see it if you subscribe and hit
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that notification bells are tolling till
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next time this is Jeff rose remind you
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that it's your money it's your life and
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only you can make it awesome and make it
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awesome with some Barbie in your life
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because what I'm doing piece
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[Music]
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