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.

Click here to read the full blog post by Leon LaBrecque on Forbes.com.

 

View Leon LaBrecque's Forbes contributor profile and other blog posts here: https://www.forbes.com/sites/leonlabrecque/

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Image is Getty from original post on Forbes.com.