First let me start out by saying that I’ve been neglecting my Roth IRA.  I’ve been neglecting it by not contributing to it in the past two years.  Ironcially, I really do enjoy investing in a Roth IRA though!

I’ve been neglecting it, and instead building my regular brokerage account balance.  One reason that I haven’t contributed to it is because I’m trying to build up an dividend portfolio in my regular brokerage account, and in the process I decided not to put the money in a Roth IRA.

But secretly, the real reason that I haven’t been contributing is because I’m trying to increase my account balance via investing means, actually more like active trading.  Oh sure, I have most of my money in my Roth IRA invested in a solid dividend stock because Roth IRAs are the perfect dividend shield   But I also have about 10% to 25% invested in stocks that I trade weekly or during big dips in the market.  I also have a cash position to take advantage of big dips during down stock market days too.  It’s a fun activity and lately, I’ve become more refined at it.  I’ve found that the less desperate that I am since I have some money saved up already, the more cool I am when I make my purchases.

Buy Low Sell High

Yep, since I’m pretty cool headed with the small percent of the Roth IRA that I actively trade, I’m able to buy low and sell high.  I never hit the absolute high or the absolute bottom, but I still make my margins which makes it fun.

The advantages of playing in my Roth IRA are as follows:

• Any capital gain that I incur isn’t taxed!
• Any dividend that is distributed isn’t taxed either.
• The amounts are small amounts and if I lose money it won’t bother me much
• I use the money to buy during dips in the market, this has work out great!
• I don’t have to worry about keeping track of all my stock transaction (although I still do keep all of the trading slips that are mailed to me).
• Since I keep a part of my Roth IRA money in cash, that cash serves as a stealth emergency fund

In chess, a Roth IRA is like the queen piece.  It’s very powerful and far reaching!

The disadvantages of playing in my Roth IRA are as follows:

• I can’t take any capital gain losses if they were occurred.
• Once I pull the money out for an emergency, I only have so long to put the money back in else wise I can’t put it back in.  While this isn’t a true negative, I miss out on future tax free growth that the money could provide… and this would be a tragedy!
• My Roth IRA can make me rich some day, oh wait… that’s not a disadvantage!!!

As you can see, just from a fun perspective, the Roth IRA is the best thing since sliced bread!

MR