5 years after you've opened your first Roth IRA account, at any custodian. So you can put in $100 today, add $4000 in 4 years, and withdraw $4100 in 5 years.




Yes! Actually, that's a brilliant idea. To contribute to a Roth IRA, you need to have earned income (i.e. be employed). But not to convert to Roth IRA. So if you have very little income this year, perfect time to convert to Roth IRA. Just make sure that you have enough cash on hand to pay taxes, and don't have to withhold money from the IRA to pay for the conversion - that is equivalent to withdrawing your retirement savings, and defeats the idea.

Please consult your tax advisor before doing any of this.




Here's the problem with leverage - it magnifies returns equally on the upside and the downside, and those are not equal. Suppose you have an investment that return +5% and then -5%. You'll have -0.25%. Now add 2x leverage: +10% and -10% equals -1%. Add 3x leverage: +20% and -20% equals -4%. The chance of a higher positive return is not worth the risk of a lower negative return.

Almost all investments have have a negative skew. I ran the analysis for the last 20 years on all US equity indices (Russ 1000, 2000, Midcap, S&P500), MSCI EAFE, MSCI Emerging Markets, and Barclays US Aggregate (broad market bond inde. This means that while most returns will be slightly above the average, there is an outsize change of very large negative returns. Distribution of returns has a long left tail. You do *not* want to apply leverage to distributions like that.

Leverage makes sense when you have certain small positive returns, such as with hedged strategies. There was a lot of leveraged bond arbitrage strategies employed by hedge funds prior to 2008 - and then they blew up. Like, lost 80-90%, because fixed income suddenly posted large negative returns.

We've looked into ETFs as well. We do have a bias towards active management, but the conclusion of my study was that it depends on the asset class and sector. In large cap US equities, indices have beaten active managers soundly over the last several years. But in mid/small cap space, in international and especially emerging markets space, good active managers win. And the return advantage far outweight the extra fees.

Yes, there are studies that show that lower mutual fund fees are tied to better long-term performance, and there are some good reasons for that - good governance, healthy fund flows.

So it depends on which space you are investing in. If it's a stock or bond-picker's field, get a good active manager. If it's large cap equity, a proxy for S&P 500, index ETF is just fine.

Also trading - very expensive.