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Strategies & Market Trends : Roth IRA ideas

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To: Bill Shepherd who wrote (121)	4/29/1998 8:11:00 PM
From: Trevor Goodchild	Read Replies (1) of 388

Bill, I max out my 401k and keep that money in diversified mutual funds. Like most astute SI users, I'm probably way ahead of the game from a retirement perspective so yes, I want to gamble my annual $2k contributions to my IRA in as risky a manner as possible. Deferring an option gain taxation and allowing for increased compounded gains is well worth the write-off of a loss. One of the worst things about options is you have to account for your gains immediately (in that tax year). You lose the whole Warren Buffet effect of buying and holding and getting compounding before taxes. Assuming 30% tax rate and a 100% return for 5 years: $1 x 2 x 2 x 2 x 2 x 2 = $32 for an IRA $1 x 1.7 x 1.7 x 1.7 x 1.7 x 1.7 = $14.2 for a taxable account. That's a huge difference between the IRA and the taxable account. It seems to me the IRA is the ideal account for options trading.

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