Author Topic: Is it better to invest in a Roth IRA or dividend paying stocks?  (Read 1990 times)

Cellogal

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Is it better to invest in a Roth IRA or dividend paying stocks?
« on: November 15, 2015, 06:32:47 PM »
I am mostly a stay at home mom, but I also teach some music lessons on the side. I have some bonds that my grandparents gave me when I was a baby that that are now worth a few thousand dollars. I would like to invest that money as well as the money I make from teaching.  My husband is hoping to retire early in at most 10 years. Would it be better for me to start a Roth IRA or invest in dividend paying stocks? I like the idea that the dividends would be paying us, but I'm not sure if I really like the idea of having to pay taxes on it. 

phil.rynn.9

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Re: Is it better to invest in a Roth IRA or dividend paying stocks?
« Reply #1 on: November 15, 2015, 06:52:08 PM »
I am mostly a stay at home mom, but I also teach some music lessons on the side. I have some bonds that my grandparents gave me when I was a baby that that are now worth a few thousand dollars. I would like to invest that money as well as the money I make from teaching.  My husband is hoping to retire early in at most 10 years. Would it be better for me to start a Roth IRA or invest in dividend paying stocks? I like the idea that the dividends would be paying us, but I'm not sure if I really like the idea of having to pay taxes on it.
  Why not buy dividend stocks inside a Roth IRA?  Best of both worlds.  You can open up a brokerage account within your Roth IRA and purchase stocks.

  I have mine set up with Vanguard, but I'm sure most of the bigger brokerage firms have the capability.

HTH,
Phil

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MDM

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Re: Is it better to invest in a Roth IRA or dividend paying stocks?
« Reply #2 on: November 15, 2015, 07:20:23 PM »
I am mostly a stay at home mom, but I also teach some music lessons on the side. I have some bonds that my grandparents gave me when I was a baby that that are now worth a few thousand dollars. I would like to invest that money as well as the money I make from teaching.  My husband is hoping to retire early in at most 10 years. Would it be better for me to start a Roth IRA or invest in dividend paying stocks? I like the idea that the dividends would be paying us, but I'm not sure if I really like the idea of having to pay taxes on it.
Cellogal, welcome to the forum.

As phil.rynn.9 said, you don't have to choose between Roth IRA vs. dividend stocks.

It's really best if you look at your and your husband's investments together.  You might benefit from reading some of the following. (note that these may not give identical advice, but if you follow any of it you will likely do well):
www.etf.com/docs/IfYouCan.pdf
http://jlcollinsnh.com/stock-series/
http://www.bogleheads.org/wiki/Category:Getting_started

If you would like some thoughts from folks here about your overall situation, see http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/.

arebelspy

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Re: Is it better to invest in a Roth IRA or dividend paying stocks?
« Reply #3 on: November 15, 2015, 10:11:02 PM »
I will add, and I don't mean to insult at all, if you're asking this question, there's a lot of reading and learning you should do first (as there's just basic terminology you don't know yet, like what a Roth IRA even is).

We all started in the same place you are now, and learning a little more (some basics) before you dive in is crucial.  :)

I second the recommendation to JLCollins' stock series.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

frugalnacho

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Re: Is it better to invest in a Roth IRA or dividend paying stocks?
« Reply #4 on: November 19, 2015, 09:38:48 AM »
I will add, and I don't mean to insult at all, if you're asking this question, there's a lot of reading and learning you should do first (as there's just basic terminology you don't know yet, like what a Roth IRA even is).

We all started in the same place you are now, and learning a little more (some basics) before you dive in is crucial.  :)

I second the recommendation to JLCollins' stock series.

I third that.