if you're a freelancer or solopreneur of any kind then this video is for you
so all you real estate agents models digital nomads consultants coaches yoga
teachers and anyone who really makes a 1099 income I'm talking to you
this video will also apply to you if you have a full-time job that you have a side gig
on the side so I'd get on a side a side gig that brings in 1099 income listen if
you're self-employed I feel you I used to have a 401 K back when I was working
in corporate and it was nice because I got an employer match and you have you
know something to help you out to save for retirement but when you're
self-employed you're completely on your own but ever since I started working for
myself I figured out that there are other ways to save and invest for the
future so just because you don't have a 401 K
does not mean you're screwed so if you want to learn more about how
to use IRAs and take full advantage of all the tax friendly ways to help you
save for retirement as a solopreneur or self-employed individual then keep
watching hey and before we get started go ahead and hit that subscribe button
my channel is all about money and investing for beginners and I know it's
gonna help you learn a ton so make sure to hit subscribe and hit the
notification bar for new videos every week if you're self-employed there are
two types of IRAs you need to have the first type is either a Roth or a
traditional IRA everyone whoever you are whether you're self-employed or you work
for a company is allowed to have a Roth or a traditional IRA they're both
amazing ways to stay for retirement and there's really no reason not to take
full advantage of them so the first step for you as a self-employed individual is
to open a Roth IRA or a traditional IRA both types give you tax benefit but you
get the tax benefits of the Roth on the back end and you get the tax benefit of
the traditional on the front end or a more in-depth explanation of the
difference between a traditional and a Roth IRA then be sure to check out this
video right here once you open either a Roth or traditional IRA the second type
of IRA you need to have is the SEP IRA most people who have corporate jobs get
a 401k with their employer but for you since you don't have a 401k what you can
do instead is to open a SEP IRA which stands for simplified employee pension
deaf IRAs allow you to put away up to twenty-five percent of your income or
fifty six thousand dollars whichever is lower and that's
five percent of your net income so after the expenses that you report so let's
say you make a hundred thousand dollars of net income in one year then you can
contribute twenty five thousand dollars into your step IRA that year twenty five
percent the best part is that you can write off any contributions you make to
a SEP IRA so it's a really good way to reduce the taxes you have to pay every
year it's like why pay any more taxes than you need to contributing to my SEP
IRA saves me thousands of dollars in taxes every year not to mention it helps
me save some serious bucks for retirement I've talked to way too many
freelancers and solopreneurs who aren't doing anything to prepare for retirement
and I know it's a really long way off but there's no corporation that's gonna
do it for you so you really need to think about your future and take
advantage of any tax loopholes and ways that the government gives you to help
you prepare so ideally you have a SEP IRA and you have another IRA either a
Roth or traditional and you are maxing out your contributions to both now if
you're a full-time employee and you have a 401k but you also make income on the
side as a solopreneur then you are a lot to have a SEP IRA as well but tax laws
are pretty complicated and there's always exceptions and what not giving
your specific situation so the only way to know for sure is to talk to your
accountant but in general you are allowed to have both the 401k and the
SEP IRA as long as you stay within the total annual contribution limit as of
2019 you're allowed to put up to fifty six thousand dollars per year tax-free
into your step IRA and or 401k combined there are other retirement savings
options for self-employed people but in my opinion they aren't as good as the
SEP IRA the simple IRA is another option but the annual contribution at $12,500
versus the step IRAs fifty-six thousand dollars is a lot lower so the simple IRA
is a much less popular option than the set and another option is the solo 401k
but those require a lot more paperwork and similar administrative stuff that a
SEP IRA doesn't have so in general it's not really worth the hassle to have a
solo 401k over a SEP IRA unless you're over 50 years old and that's because the
solo 401k lets you do what's called catch-up contributions now I'm not gonna
get into the specifics of Scylla 401ks in this video but just
know that if you're self-employed and you want to be able to save a ton of
tax-free money for retirement and keep your investments in a tax ID account a
SEP IRA is a super easy and hassle-free option to open a SEP IRA all you have to
do is choose a brokerage that offers the SEP IRA as an account option I currently
have my SEP IRAs adela t and I love it but there's a lot of other really great
brokerages out there to choose from Vanguard is great for anyone who wants
to invest in index funds although fidelity is good for that too betterment
is another option you can look into it's a Robo advisor that offers
professionally designed investment portfolios that you can choose from and
then customized for your goals and your risk tolerance the interface is super
nice and easy to use other brokerages that offer stuff IRAs are TD Ameritrade
e Trade Charles Schwab and Interactive Brokers if you learn something from this
video please give it a thumbs up and feel free to let me know in the comments
if you have any questions and I'll be sure to get back to you once you've set
up your step IRA and you want some ideas on what to do with it check out these
two videos right here for some beginner friendly info on how to start putting
your money to work and of course if you're new to the channel be sure to hit
that subscribe button for new money and investing videos every week always
remember to go after your dreams unapologetically and to live life on
your terms Cheers