Are ETF's which invest solely in foreign stocks appropriate for a Roth IRA? Are there any adverse tax effects

Question

Are ETF's which invest solely in foreign stocks appropriate for a Roth IRA? Are there any adverse tax effects

Answer 1

ETFs or better yet, a mutual fund, invested in foreign markets will be a boon to your portfolio for a few more years...the world is just developing, growing and trading at great pace.

( I suggest a mutual fund, because the ETFs are sometimes TOO widely invested, whereas a fund manager picks and chooses better investments...culling the " losers", etc. ...ETFs ( by design) invest in the broadest range in the particular sector of their focus)

...as for tax implications?  There are none... ( you may pay some " foreign taxes" on some dividends, but it never leaves you any " paperwork"... all regular cap gains ( long or short-term) are YOURS to keep. Don't split it with the gov...don't even have to account for it...it's just yours !  Now, please tell everyone you love to smarten up and get one.

Answer 2

By the very nature of Roth IRA there can't be any tax implications. All the gains and interest earned in Roth IRA are tax free.

Answer 3

They can be appropriate, but you probably shouldn't put all of your money into them. You should use them as part of an investment plan that also includes domestic stocks, large and small cap stocks, bonds, and other asset classes. It's important to allocate your investments well. You need to invest in several different asset classes in order to find a mix that makes you comfortable with the risk that you are taking and the volatility that you will see.

As for taxation, withdrawals of your actual CONTRIBUTIONS to the Roth IRA can be withdrawn any time without any taxation or penalty. Your EARNINGS can be taken tax free under most circumstances after age 59-1/2.

NOTE: This is not intended to serve as investment advice for you. If you are investing, you should consult the services of an investment advisor and/or an accountant. In other words, although I believe what I said, I won't be held legally responsible if you act on my advice. Just covering my rear end.