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deleted171991
OK, so let's suppose a stock appreciates 4% yearly and makes another 4% as dividends.
Let's calculate the profit from the stock growth in the 3 scenarios. For simplicity, I will not recalculate
1. Taxable IRA: We start with $100 invested, which produces $906 profits, which is taxed at 20% once = $724 net profits.
2. Taxable non-retirement account: The $100 account will grow to only $851 (the dividends are already taxed, yearly), and we will have to pay another 15% tax on the $453 capital gains from the stock growth. $683 in net profits.
3. Roth IRA: We start with $100-current income tax=$72. That will grow to $724, including dividends. Net profits $624.
Taxable IRA wins again.
P.S. There might be mistakes in my calculations. Please take them with a big grain of salt.
Let's calculate the profit from the stock growth in the 3 scenarios. For simplicity, I will not recalculate
1. Taxable IRA: We start with $100 invested, which produces $906 profits, which is taxed at 20% once = $724 net profits.
2. Taxable non-retirement account: The $100 account will grow to only $851 (the dividends are already taxed, yearly), and we will have to pay another 15% tax on the $453 capital gains from the stock growth. $683 in net profits.
3. Roth IRA: We start with $100-current income tax=$72. That will grow to $724, including dividends. Net profits $624.
Taxable IRA wins again.
P.S. There might be mistakes in my calculations. Please take them with a big grain of salt.
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