Hello! I was curious to know if you could day trade within your own ROTH IRA account, or hold stocks for short periods, 2 days, a week etc.. Since there are no taxes on gains i thought this might be a clever little idea.. I realize I cannot take this money out until I am of age(or first house and maybe a few other ways out).. but it seems like it would be a great way to build that nest egg without paying taxes( you pay taxes upfront for it). Obviously the downside of this is that I can only contribute 4k a year maybe 5k this year not sure.. so I wont be purchasing a leer jet anytime soon, however, tax free money is, well, tax free. Am I off my rocker? PS: I am young and do not depend on this as my source of income.. so please do not think that I am gambling my life savings away and will be homeless in a week. I just would prefer to make profits without paying taxes. Cheers.
I cant day trade my 401k however I do dump everything when I see a pullback and then buy back in after the market drops significantly. Example my 401k is up 2.5% this year while the DOW is down 2.5%
I wouldn't day trade your IRA. I don't mind people taking out their IRA to invest elsewhere for greater ROI but daytrading is a very risky game in which the odds are stacked against the retail investor. The fact that you're even asking this question shows you don't have what it takes to be a successful daytrader. Leave the IRA and invest, or learn more about trading before committing your hard-earned money.
This isn't something I'd do either. Some investment funds specifically earmarked for day-trading would make sense. However, that's a bit too risky for me to play with IRA funds in such a way. To each their own though.
Not familiar with the systems in your country, but I don't see why not. Better call your broker and ask them directly, they should be able to answer. Also check out the other similar systems available for you and make sure it's best to do this in a Roth IRA instead of something else... 4-5k of cash is the very minimum I'd try day trading with unless you are into leveraged products.
To answer the question, there is no issue with day trading a Roth. In fact it's better to do it in a Roth than a taxable account since any gains will come out tax free if done as a qualified distribution. It won't matter if they're short-term gains which would be taxed at ordinary income tax rates if transacted in a taxable account. That said, long-term you won't beat the market. If you're young, best bet is to keep investing into a diverse portfolio of stocks, assuming you can tolerate the risk. Read the story of portfolio manager Bill Miller who was arguably the most successful stock picker of all time, until he crashed and burned. http://fortune.com/2011/12/07/bill-miller-had-a-great-run-but-did-his-investors/
Correct me if I am wrong but most Roth IRA's have a penalty that comes with early withdrawal of funds. You would be taking money out of a tax sheltered account in order to day trade which is very risky, even more so since you would have to make gains that exceed the penalty for withdrawal and the interest or tax advantage you had with the Roth intact. Sounds like a great way to lose your shirt. This is why it is recommend that as an investor you have liquid assets that can be used for this purpose. Seriously the casino might be a better bet then day trading.
Roth IRA's do have a penalty for early withdrawals, but one doesn't need to take money out if they wanted to day trade. You can just trade within the Roth account. Any earnings stay in the account, and when you turn 59 1/2 you can take those earnings out tax free (some other distribution requirements for them to be considered qualified distributions as well).
If you're young, I would just pick some good growth stocks and let them sit there and do the work for you over time. That doesn't mean you can never switch them out for something better, but why try to play more of a guessing game with day trading if you don't have to? The young, have TIME on their side. Almost anything will grow over time and if you do a little research and actually pick some good stocks, you'll be that much farther ahead.
That is the safest way to go. But not necessarily the best. This is not a either or situation, as long as he has the capital he can do both. I am also young but I do daytrade once in a while because... well... I like it.
