IRA vs. Non-Retirement Account?

Question

I was thinking of opening an account with Oppenheimer Funds. I wanted to open both a Roth IRA and a non-retirement account. Is that commonly done? If so, what ratio of money do people invest in both compared to each other?

Thanks to anyone that answers. It's the first time I've dealt with mutual funds, so I'm a bit clueless as to this whole process.

Answer 1

Put your maximum annual contribution into Roth Iras. Put your other discretionary investment funds into a trading account.  Losses on investments in a Roth are generally not tax deductible.  At least losses in a regular taxable cash trading account may be used as a deduction on your tax return.  For that reason, I tend to  buy the more stable, big dividend payers in my Roth and if I buy a more volatile swing stock I buy that in the cash account so that if I have to take a loss, at least I can claim it as an offset against my gains there.

Another reason why you might want both types of accounts:

Many people make a lot of money with securities over the years.  If you need to tap that money when you want to buy a big ticket item (car, house) you can take some money out of the trading account for that purpose, paying  the tax on the capital gains.  But if you have all your investments in an IRA, under current tax regulations you will pay the  tax on the funds you withdraw, and usually you will also pay a big PENALTY if you withdraw before age 57 and one-half.

Answer 2

I don't use an IRA, but I invest in my own personal account.  You have more freedom without an IRA, but you also get taxed. It all depends on how you want to invest, stocks, options,spreads.

Answer 3

Invest in both.  The idea of investing in a non retirement account is to put money into a long term investment that you can take out before retirement without the penalties you would have in withdrawing from a retirement account.  In terms of the ratio you should look at both accounts combined and keep a balance between stocks and fixed income investments.  The rule of thumb is to keep the same percentage as your age in fixed income.  Concentrate on maximizing contributions to our retirement accounts first, because of the tax-free growth of earnings.

Answer 4

just max out your ira and put anything leftover in the taxable account.