There really isn’t much difference between the top 5% wealthiest Americans and those who fall into the masses below. The only big difference is an understanding of the system, the drive to create a change for oneself, and the action of actually doing it. Every day people decide to set aside a limited amount of their money in order to invest and increase their wealth. YOU DON’T NEED TO HAVE VAST WEALTH TO BEGIN INVESTING. $20, $100, $1,000, $10,000,000…there is market opportunity for all. Making solid financial decisions at a young age is an easy, important way to begin your path to financial success. There is nothing I want more for those I love than the ease of knowing you always have a safe, smart, and perhaps even lucrative place to invest or save your money. Fiscal understanding is ONLY the key to obtaining, retaining and passing on wealth. Over the next few months I will share some of my favorite thoughts and information on investing in various forms. This week I would like to lay out the basics of an IRA Roth. Remember, it’s never too late to take advantage of your own worth; if you don’t, someone else will.
1. What is an IRA Roth?
An IRA Roth is a non-taxed retirement account based on specific conditions being met. It is essentially a ‘safehouse’ for your earnings where you can choose to actively invest or simply save what you put in.
2. Tax-free?! What are the conditions that need to be met?
The biggest difference between a traditional retirement account (IRA) and a Roth IRA are based on taxation. Where most retirement plans are taxed when you take money OUT, IRA Roth’s are taxed when you put money IN. Think about this for a moment. The average 20 year old has zero net worth. Yes, the average 20-year-old American is in debt, has no home or other assets, and essentially lives paycheck to paycheck making ends meet. As you get older, you gain assets. You buy a home, you change careers or move up in your current career, you buy a car, stocks, etc, etc. Most of the assets, wealth and worth you compile will be based on personal income and preference, however you will be wealthier. This means you will be in a higher tax bracket. What an IRA Roth essentially allows you to do is put some savings aside NOW and pay taxes at your current bracket, then when you remove them later in life you will have a greater savings, especially if you actively invest that money and happen to make gains. That being said, the government actively increases taxes continuously so even if you are older and nearing retirement, it might still be a good idea to begin an IRA Roth as taxes have a much higher likelihood of increasing as opposed to decreasing.
The total contributions allowed per year are as seen below, If you have more than one IRA, this total must be split up between them…it is a TOTAL amount that can be put in IRA Roths per year. If you are a married couple with a shared account, you may each contribute up to the amount listed below per year. Keep in mind these are maximums, so for example, this year, since I am 24 years old, I can contribute up to $5,500, however I can also contribute LESS than this into my Roth. Makes sense?
|Age 49 and Below||Age 50 and Above|
Additionally, there are income limits on a Roth. For full contributions, individuals who make over $112,000 a year and joint filers who make over $178,000 are no longer eligible. If you income currently exceeds these limits, have hope!!!! You can still utilize a Roth by contributing to a traditional IRA and converting it to a Roth. In this case, you will be subject to contribution limits but not income limits. There is no limit to how often this transaction can occur as long as it is within yearly contribution limits.
What can you keep in your Roth?
You can place cash, securities, stocks, bonds, endowment contracts for life insurance, or even real estate in your Roth.
What are the pros of setting up an IRA Roth?
*Your IRA Roth direct contributions may be withdrawn tax and penalty free at any time. Converted contributions (more info on this above under) may be withdrawn tax and penalty free after the a 5 year seasoning period. Here is my favorite part: EARNINGS may be withdrawn tax and penalty free after the seasoning period if you are over age 59½.
*You may make contributions to a Roth IRA even if you currently have a qualified retirement plan like a 401(k).
*If the owner of the Roth IRA passes away, his or her spouse becomes the new owner of the Roth in addition to their own, and there is no penalty for combining the two IRAs into a single one.
*Roth IRA assets can be passed on to heirs.
*Roth IRAs have no required distribution based on age. With a normal retirement plan, you are required to begin withdrawing from the account after April 1st the year you turn 70 1/2. With a Roth, you can continue to leave the money there and accumulate income on it, then pull it out or pass it on to an heir. Beneficiaries who inherited Roth IRAs are subject to the minimum distribution rules.
*Roth IRAs have a higher “effective” contribution limit than traditional IRAs. This is because the nominal contribution limits for both types of IRAs is the same, but the post-tax contribution in a Roth IRA is equivalent to a larger pre-tax contribution in a traditional IRA that will be taxed upon withdrawal. For example, a contribution of the 2008 limit of $5,000 to a Roth IRA may be equivalent to a traditional IRA contribution of $6667 (assuming a 25% tax rate at both contribution and withdrawal). In 2008, one cannot contribute $6667 to a traditional IRA due to the contribution limit, so the post-tax Roth contribution may be larger.
*If you have a family estate plan that can be subject to estate taxes, a Roth IRA might reduce these taxes since the tax dollars were already subtracted when they were contributed.
What are the cons of opening an IRA Roth?
*Your original contributions to a Roth IRA are not tax deductible whereas they are with a traditional IRA. This is because with a Roth IRA you are paying the taxes when you put money in, incurring a cost upfront that is not present when putting money into a traditional retirement plan. Roth plans do not realize this immediate tax reduction as your true savings come when the money is finally taken out years down the road.
*Withdrawals are generally tax-free, but not always and not without certain stipulations. For example, you must be over the age of 59 1/2 to receive tax free benefits on your growth portion above the principal. Hence why this is a retirement account and not a traditional savings.
*If retirement savings are less than expected, you are stuck between a rock and a hard place as you already paid taxes on your ingoing contributions and cannot switch to the lower tax rate for distributions in retirement. As people tend to make more money and have more assets the older they get, this shouldn’t be a big deal for those under 50. However, if you are over, heavily consider where the economy is headed before making this decision.
*Funds that reside in a Roth IRA cannot be used as collateral for a loan per current IRS rules and therefore cannot be used for financial leveraging or cash management tool for investment purposes.
*Your adjusted gross income (AGI) will not be reduced when contributing to an IRA Roth like it will with a traditional IRA plan. This means if you are close to a threshold income of qualifying for some tax credits or tax deductions you cannot reduce your AGI below the threshold whereas with a traditional account you may be able to.
*A taxpayer who chooses to make a Roth IRA contribution (instead of a traditional IRA contribution or tax deductible retirement account contribution) is electing to pay income taxes at their current rate. If tax rates lower for some reason or if you are placed in a lower income tax bracket after retirement you could pay more income taxes on the earnings used to make the Roth IRA contribution as compared to the income taxes that would have been due to be paid on the funds that would have been later withdrawn from the traditional IRA.
*Congress may change the rules that currently allow for tax free withdrawal of Roth IRA contributions. Therefore, someone who contributes to a traditional IRA is guaranteed to realize an immediate tax benefit, whereas someone who contributes to a Roth IRA must wait for a number of years before realizing the tax benefit, and that person assumes the risk that the rules might be changed during the interim. On the other hand, taxing earnings on an account which were promised to be untaxed may be seen as a violation of contract and completely defeat the purpose of Roth IRA’s as encouraging saving for retirement – individuals contributing to a Roth IRA now may in fact be saving themselves from new, possibly higher income tax obligations in the future.
If you think an IRA Roth might be right for you, I encourage you to learn more. Before you do, focus first on paying off all debt as quickly as possible and saving your first $500, or whatever your savings goal is. Debt is the biggest curse and obstacle to financial freedom that the world has told you is okay. Debt is never a good thing…why let someone else make money off of your spending when you could be making money off of your own money? As a young person, considering an IRA Roth may be a big asset to those wishing to grow their personal fortunes over time and not get stuck in the same difficult rut that most individuals do.
If you are interested in the steps to starting an IRA Roth or learning more, check this article out: http://www.getrichslowly.org/blog/2007/06/07/how-to-start-a-roth-ira-and-where-to-do-it/
If you are interested in gaining more info as to the advantages, check out this convincing article: http://blogs.marketwatch.com/encore/2014/01/23/its-official-the-rich-love-the-roth-ira/ .
Be back with more soon,
****Disclaimer: I AM NOT A FINANCIAL ADVISOR OR EXPERT IN ANY WAY. All of my writing is based on personal experience and readings alone. The purpose of this article is simply to educate and share information and is not to be used to sway or make decisions for any entity or individual. Any financial decisions made based on this information comes at your own risk and thepersianpishiblog and all affiliated parties are held completely un-responsible for your decisions.
I’m super excited to finally be able to share our Christmas and engagement pictures with all of you! It took a while to put these up because I have been so wildly busy traveling to trade shows to set up showrooms and work with representatives. These are just from our announcement; we still have actual engagement photos coming up in the next few months. Thank you SO MUCH to everyone who put forth effort to make this afternoon one we’ll never forget! I look forward to blogging about the effort put into the wedding as time goes on and being able to offer some advice and input on planning a multi-cultural wedding!
Food: Master chef Franck Baquet
Photos: SVS Inc.
- Sleep 49 hrs/week (7 hours a night)
- Work 50 hrs/week (Prioritize while at work to limit to 8-10 fully productive hours each work day)
- Stocks, investments 3 hrs/week
- News, global affairs 3.5 hrs/week
- Blogging 3 hrs/week
- Time with loved ones 5+ hrs/week minimum (Fiance, parents, friends…down time with those you love!)
- Cook 6 hrs/week
- Workout 4 hrs/week (Four workouts a week)
- Drive time 5 hrs/week (2 20min drives, 5 days a week with extra 10 mins each in case of traffic)
- Creative hobbies 5 hrs/week minimum (dance, art, sew, concerts, music, new concepts, decor…it is important to always learn new things!)
- Clean home & office 2 hrs/week
- Free time 5 hrs/week (television, movies, shopping)
- Meditation 1.5 hrs/week
Yesterday was the best Christmas ever- Danish and I got to announce our engagement to the world!! This has been one of the most incredible, momentous moments of my life. I honestly never thought I would get married, being how nuts I am about my work and how independent I am by nature. Danish is the first person to ever make me feel like I NEED someone to complete me. He filled in this missing piece that I never knew existed. It is easy to hit it off with anyone just by seeing the good in all; however it is tough to find people that truly ‘GET’ you. Not only does he totally get me, contribute to who I am and what I want to achieve; but he is also the coolest person in the entire world. Everything about him, from his kind personality to his career to his style, is just HIM. No one else could get away with being as cool and eclectic as he is without seeming pretentious, but he is just so absolutely good and kind hearted that it is impossible not to fall in love with him and his genuine care for the world. I have to brag on him simply because I have never met anyone like him and believe he was truly made one-of-a-kind for me. He is one of the few men I have ever met that I actually look up to. I have high expectations; but then again every girl should. Every experience, mistake and triumph that we have both gone through have brought us here. Never have I felt so loved by anyone but my own parents. I trust him infinitely and know that, while I feel I am the luckiest girl ever, every other girl also has a love out there that will make her feel like this. And it is important to find him. Don’t settle, don’t wait. Just progress in who you are and he will come to you. And when he does, be yourself and put it all on the table. If he doesn’t love you for it, he isn’t the one. In today’s world it can take a long time to find the one because of inflated egos, past frustrations, insecurities, difference in lifestyles…you name it. All I know is, your prince charming is out there and all you both need to realize the dream of love is compassion, kindness, communication, understanding and the willingness to put ego aside and build a life together. I am so excited to do just that with Danish, and know he is the ultimate holder of my heart.
ENGAGEMENT PHOTOS by: SVS INC.
Now I get to start putting together the wedding! We are waiting until Spring 2015 so we have plenty of time to plan and can get family in from overseas. Also, there is just so much work in both of our lives that we thought it best to give ourselves a long period to get ready so we don’t stress out about the wedding NOR work. I am so excited! I will definitely be posting up my ideas and plans as we go through this process- it will be quite cool to see a large wedding with three unique cultures- Persian, Pakistani and American- come together.
That’s all for now, I need to get back to work! Nothing like the quiet comfort of the office the day after Christmas. Be on the lookout for some great posts on fashion, investing and sprucing up your home for the new year this coming week!
Sorting through the hype and excitement, I’ve chosen six of the hottest products from 2013 to review in all honesty. Enjoy!
1) GLAMGLOW supermud clearing treatment
Available at Sephora and other fine retailers: $69
My verdict: 2.8 of 5 stars.
The first time I used this product I was blown away. The problem is, the more I used it, the more issues came to light. I am a huge fan of the charcoal properties in the mask and felt it truly did do a great job minimizing the appearance of pores; the issue was breakouts. While I am a bit prone to blackheads, I never have issues with acne. After using this product three times within the week (as suggested), I noticed I had three whiteheads within the course of that same week. Hoping it was just a fallacy, I continued to use it for another 3 uses over the next week with the same continuous issue. As this is the only thing that I changed within my skin care routine over those two weeks, it is pretty safe to say this was the issue. That being said, this is a great mask to use once in a while for the mere purpose of minimizing pores.
2) La Prarie Cellular Serum Platinum Rare
Available at Neiman Marcus and other fine retailers: $680
My verdict: 3.5 of 5 stars.
La Prarie fames itself to be the ultimate in luxurious at-home beauty. As a fan of their previous skin caviar collection (in the blue jars), I was super excited to try the new Platinum Rare collection. This serum is supposed to brighten, tighten, increase hydration, and provide an overall transformation to the skin. While it feels nice, smells nice and does a nice job brightening, a lot of the hype behind this product is just that: hype. While it sounds cool to wipe platinum all over your skin each night, save your $$ and invest in a more results oriented serum. To be honest, I really like Genifique by Lancome (review below) and saw way better results from it. I still have a half bottle left of this, and while I will continue to use their skin caviar, I’ll pass on buying this serum again.
3) Lancome Genifique
Available at Macys and other fine retailers: $84
My verdict: 4.3 of 5 stars.
For an at home serum, this little bottle is the best out there. Not only is it reasonably priced (this little bottle is packed!) but it also provided immediate and continuous results. I have used this serum on and off now for about a year, and every time I change my regime up I can tell an immediate difference. This formula seems to work well for all skin types and provides a nice protective layer on the skin that can be worn after washing at night or under makeup during the day. I really recommend this product and suggest you all ask for a little sample next time you pop by Macys, Nordies or Sephora. After about 10 days you will see a nice difference in the tone of your skin.
4) Exfolikate by Kate Somerville
Available at Neiman Marcus and other fine retailers: $85 (I believe there is also a smaller size for about $20?)
My verdict: 4.0 of 5 stars.
I am super picky when it comes to face washes. I typically make most of my own washes myself so I know everything in it will mesh with my skin types and clean deep without stripping my skin. Though I’m not usually one for store bought cleaners, this stuff is GREAT! I only use it about once a week for a super deep clean, so the bottle also lasts for a long time. A little goes a long way! I love being able to both smell and feel the tingling, herbal properties working to slosh dead skin away. Definitely a must have- I even bought my mom her own bottle!
5) MISSHA Choco Cacao Scrub
I purchased this in Korea for about $25 USD, but I am sure you can find it online or through MISSHA dealers worldwide.
My verdict: 3.0 of 5 stars.
I love chocolate. My favorite part of this scrub is how incredibly REAL it is…no fake chocolate scents here, folks! Plus, for only $25 the pot is quite large. While the consistency is a bit sticky and weird, the smell is incredible and this mask rinses off beautifully to reveal fresh, soft skin underneath. It really doesn’t seem to do too much for the skin as far as results, but it is definitely a nice softening agent for a luxurious spa night at home.
6) Liz Earle Cleanse and Polish Hot Cloth Cleanser
Available HERE: $24.50 for the starter kit
My verdict: 3.9 of 5 stars.
I came into this purchase with high hopes, having heard rave reviews from friends on the East coast who recently tried this product through the Birchbox sampling program. My opinion? It doesn’t make me want to drop using Exfolikate but it’s DEFINITELY a great product for the price and a nice cleanser for everyday care. The raw herbal ingredients can be smelled when pumping the cream out onto your hand and a little goes a long way. My favorite thing about this cleanser is how refreshed your skin feels afterwards. The starter kit comes with two exfoliating towels that really work with the cream to polish and cleanse the skin in a softening, kind way that most harsher cleansers are incapable of. If you crave softer skin and are open to trying a lotion textured cleanser; this is the best I’ve tried yet!
I’ll have more reviews up soon! xo Persian Pishi
Let me start by saying I’m not 100% against diamonds. When sustainably obtained, they can be a beautiful offset for jewelry and other gems. That being said, I’m here to give you the skinny on exactly what you’re getting yourself into by purchasing a diamond and what alternatives I would suggest instead. Remember: the goal of this article isn’t to amass jewelry. It’s to allow yourself a material moment without feeling bad about it later.
Four simple reasons you shouldn’t focus on diamonds as an investment gem:
1. They have no investment or resale value. 95% of the diamonds on the market have no intrinsic value. Granted, there are exceptions, however these diamonds have either some sort of historical relevance (ie Elizabeth Taylor’s diamonds, the crown jewels…rare gems or those worn by specific cultural icons) or come with a designer name that holds more value than the actual gem. Other, more unique gems (or even unset stones) tend to have more potential for return in the long run.
2. Slave Trade. Very few companies actually own their own mines and can vouch for being entirely slave free. Companies who buys from mass mines has no complete way of ensuring their diamonds were ethically sourced. Nearly half of the workers who hunt for diamonds are children under the age of 16. A typical diamond slave will only make about $1 a day and receive a cup of rice ration to eat. There are programs like the Kimberly Process that are aimed at eliminating ‘blood diamonds'; however blood diamonds have taken on a new name. With such horrendous labor regulations, many sources are now able to pay a bollocks wage and get out of calling a diamond ‘slave trade’ because now, instead of working for $1 and rice, the ‘employee’ now makes $4 and is considered fairly paid because their name actually shows up on a book.
3. Marketing. You’ve probably seen the rants about De Beers marketing scheme. I wish I could tell you that it’s false, but it isn’t. De Beers, in a desperate attempt to unload their mines way back in the day, spent a plethora of money on a marketing campaign that made diamonds the ‘must-have’ for any woman. And how else do you profit in the middle of tough economic times? You tie it to one of society’s most valued norms and every girl’s dream; marriage. Now, I’m as capitalist as the next guy; so smart business move. BUT, the true problem is tied to the practices behind this original business plan (or shall we call it cartel plan?): fix prices, control supply and limit competition. Pretty monopolistic if you ask me…which isn’t a big deal, unless you like giving all your money to the same five people.
4. Industry markup. Firsthand knowledge at work here; the costs associated with diamonds versus profit is ridiculous. When it comes to diamonds, the margin of profit runs anywhere from 100% to well above 1000%. So, imagine you want to buy a ring that costs $5,000. The actual cost to make that ring could have been anywhere from $200 to $2,000 depending on the exact specs of the ring as well as the sourcing and marketing expense put forth by said company. When it comes luxury goods this is common practice. However, luxury goods do not promise high investment and return value. They are made for people who have money to spend on a particular item and/or want to spend money on a particular item due to taste, demand or other reasons. When it comes to diamonds, the trade has blossomed on demand by literally tricking the common man into spending a ton of money on something completely worthless that is more of an obligation to ‘show love’ than anything else. Go try to resell a traditional diamond necklace or ring versus a Chanel bag and you’ll see the difference in purchase versus sale value. Chocolate diamonds are the worst of all. They are essentially low grade, industrial pieces that have become popular because some Persian guy (yeah, we’re not all that cool) was smart enough to market them as ‘chocolate diamonds’.
So you’ve decided not to buy a diamond. What are your alternatives?
Diamonds may not be forever, but there certainly are other gems that are. As a rule of thumb, gems increase in value at the rate of inflation, so though you won’t get double-digit gains, you do get a store of security. Buying a piece from Tiffanys or Macy’s may make you look pretty, but it won’t add to your wealth. To create value from your investment, you will need to look below retail. Going direct to a dealer who mines and cuts themselves will not only give you great value, but also increase rarity if you utilize a unique design. Whether you choose something one-of-a-kind or simply mold off of another precious cut, custom gems are always of more value than a commercial cut because of rarity. If you have the patience, estate sales and other second hand methods are a very interesting way of coming about fine, valuable jewelry. I personally haven’t gone this route before, but I do know someone who has made quite a bit of money and amassed an incredible collection through this manner.
One thing I cannot emphasis enough: though the following are all traditionally greatly valued gems, rarity is always a determining factor in value. Do NOT buy traditional store bought jewelry. Go the extra mile to invest in something unique and I promise both your wardrobe and net worth will thank you.
Emeralds, gold and platinum are all universally accepted as precious and valuable since the old ages. Emeralds are not only my birthstone, but also my favorite gem when it comes to both investment value AND looks. Known as the most valuable of stones, you will still need to sort through the nonsense as many companies offer shoddy yet expensive emerald jewelry. The value of these gemstones is solely dependent upon a combination of attributes known as 4Cs- Cut , Carat , Color and Clarity. Though pretty expensive, Padparadscha Sapphires are also one of my absolute favorites (see pink pics below). Sapphires, rubies and silver are all also wonderful, less expensive alternatives that maintain good value. If you are looking for something slightly less traditional, try checking into: Tanzanite, Mandarin Garnet, Paraiba Tourmaline, Benitoite, Pink Apatite, Imperial Topaz, Demantoid Garnet, Contra Luz Opals, and Mint Green Garnets.
In short, your gem collection should not only bring you joy and glitz, but it should also be viewed as a life investment. I am not against utilizing safe trade-certified diamonds to offset another precious stone, however think before spending your money on a generic diamond necklace in the future and instead consider a piece that is a wonderful investment and will also bring you a lifetime of joy!
The Persian Pishi