The recent chaos in the market, coupled with the most significant sell-off since 1987, has at least one silver lining: if you intend to invest, you can invest in a Roth vehicle and recoup gains potentially tax-free. Roth IRAs, and their bigger sister, the Roth 401(k), provide the opportunity for savers to develop investment returns on a tax-free basis. Let’s hypothetically say you owned the S&P 500 and suffered the indignity of about a 25% loss since February 19, 2020. Since, in our hypothetical example, you are confident that the market will recover, go tax-free. Recall investment math, if you suffer a 25% loss, you need a 33% gain to get back to even. A 33% gain would be pleasant, and a 33% tax-free gain would be more pleasant. A key rule of Roths: the time to fund a Roth is when the market is low.
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Image is Getty from original post on Forbes.com.