Beginner Investing/RE:


Hi Paul-  Thank you again for all your help.  One last question. Do you recommend buying stocks in an IRA or in an individual taxable investment account? Im not sure which would offer the most benefit.  I suspect in the investment account the taxes on the gains can be a write off, but in an IRA perhaps you are more protected from taxes. Would appreciate your feedback on this.  Have a good one!



  Thank you for the follow up.
For the long term, its no contest: IRA account.

First, be sure you won't need the funds until retirement (after 59 and 1/2). If you withdraw early, you pay heavy penalties.  If you may need access to the funds, then a standard individual trading account may be better. You can typically sell stocks, and access the funds very quickly in a standard trading account. However, you pay tax on the profits every year. There are different tax levels depending on if you hold the stock short or long term (higher tax for short term).

If you decide you truly want to build a retirement account, without need of accessing the funds before your 60's, look into ROTH IRA versus a standard IRA. There are income limits (something like $160,000 a year if married, less if you are single) so if you make too much you can't utilize a ROTH IRA.  Here are the main differences:

ROTH IRA:  You cannot take a tax deduction on your contributions each year. However, when you retire and begin withdrawing, you don't pay income tax on the withdrawals. This is a big deal, a huge advantage. You also are not required to begin taking minimum withdrawals at age 70. So major tax advantage, and you can make up your own mind when you need it.

IRA:  You can tax deduct your contributions each year. However, when you retire, you pay income tax on your withdrawals. So while you do have to pay income tax on withdrawals when you retire, at least the funds can grow tax deferred, so it grows faster because you don't have to pay tax on profits (until you retire and withdraw). You have to take a required minimum distribution withdrawal starting around age 70, even if you don't need it.

There are other differences to, as long as you can do without the tax deduction each year for your contribution, the ROTH IRA is very powerful.  You can hold just about any stock, bond, mutual fund, ETF, treasury, REIT, or other types of investments within an IRA or ROTH IRA.

I hope this helps, please do not hesitate to follow up with me if I can offer anything additional.

Best Regards,
Paul Henneman
ValuEngine Inc

Beginner Investing

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Paul Henneman


I can answer any questions on investment strategies. Specifically, my expertise lies in long term investment strategies designed to beat market performance while reducing risk. Not get rich quick schemes, but solid investing strategies. DO NOT SEND ME YOUR HOME WORK QUESTIONS! Over one half of the questions I receive are clearly students in finance or economic classes asking for answers to their homework questions. Most of these come from India. I won't answer them, do your own work. However, I welcome all investors trying to negotiate how to invest in stocks, mutual funds, ETF's, and other investments.


15 years in a leadership role at a financial research company. We sell research to institutions such as Wells Fargo, Fidelity, Thomson Reuters, Bloomberg, Bank of NY, Scotia Bank, and others.

Florida International University, University of Florida

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