TopDollar Investing

[Brick]

How I will make a million dollars tax free!

First of all, I am not a professional and this is not investment advice. It is only my opinion. You should seek a professional financial adviser for your particular situation. I will write in first person so you will know that I am only speaking about me.

So, what's the catch? There is none. I was qualified to open a Roth IRA and can contribute $6,500 per year (including catch up contribution, since I'm an old fart now). A Roth IRA is funded using my after tax dollars (like the money in my checking account and not pre-tax like traditional IRA or standard 401k). At age 59 1/2, I can start withdrawing whatever money it has tax free, including any earnings and increases.

For the last two years, I've been contributing and putting the money in some good growth mutual funds. The problem is the mutual funds lost money the last two years. I then realized that I can trade the account in stocks. I applied and received margin on the account that is only used to clear funds after I sell a position. Margin cannot be used in the traditional sense, like 2:1, etc. It is still 1:1.

I also realized that since this is a Roth IRA, it will be tax free when I withdraw. This was icing on the cake. With last years contribution of $6,500 and this year's partial contribution so far, I can trade stocks just like my regular brokerage account. Pattern day trading rules still apply. Day trading will be allowed after $25,000 value of the account. Until then, I can day trade up to three day trades in a rolling five day period.

Also, there are no wash sales since the account is not included in my income tax return.

I researched all of this to confirm that I was thinking correctly. So, I will spend the next nine years with about $10,000 starting out and turn that into a cool million in nine years.

I did some calculations in a spreadsheet. If I finish out the $6,500 contribution this year (for a total of $13,000 my contribution) and do not contribute the remaining years, and if I earn just 6% return each month on the monthly balance, I can have a million dollars in the account in 6 years 3 months. Can I earn 6% per month? Yes, with my eyes closed. Granted, once the account increases in value, scaling will be a factor. For example, a $500,000 balance account at 6% is $30,000. It will take more effort and perhaps bigger trades in the upper range.

So, this is how I will have a million buck in just a few short years and ALL OF IT WILL BE TAX FREE!

As an adder, my ultimate goal is to trade enough in my regular broker account to live very comfortably. The remaining trading will be in my Roth. This way, I may can build it up much quicker.