It isn’t that I can’t afford to do it… It’s just that a good old fashioned incandescent light bulb finally lit up (powered by knob & tube wiring) and I re-remembered why I’d never opened an account in the first place.

The big hurdle that I don’t want to have to confront is all that business about access to the money.

Specifically, it’s the lack of access to the money — even with a Roth — that turns me off.

My 401k already has over $85k tied up that I can’t touch for the next 26 years. That’s a really long time. And it sure feels like an awful lot of money too…

A Roth IRA on top of it all would just make more of my money inaccessable — when I kinda need it.

Now I’m not going to stop contributing to my currently match-less 401k or anything. I’ve toyed with the idea but haven’t acted on it and I’m not planning to.

But I’m also not keen on the idea of locking more of my income away where I can’t get at it.

A decent selection of plain Jane mutual funds would probably suit me better. Same risk with full access.

(The tax implications, or ‘advantages’, are, as far as I’m concerned, minimal.)

And that’s the key — if I need the money before my knees are completely shot (which I will), I can get it.

For now, though, the money that would have gone to fund the Roth IRA will be probably be split very unevenly between savings and mortgage overpayments.

Sorry — you just can’t convince me that having your house paid for in your mid-thirties is a poor financial strategy…

To me, eliminating the biggest monthly bill forever is financial freedom.

Oh, yeah, and GO CANADA!

Of course, back then, the Dow was cruising along nicely at the 12000 mark and I thought that he was either high or just an idiot — an entertaining one.

Well, going out on a limb (a tiny one), I’m expecting his prediction to finally happen this week…

So am I buying in?

Reconsidering that Roth IRA idea I was throwing around?

I’ve got the funds available to max out a Roth for the year, and then throw some extra towards some ridiculously diverse mutual fund or something…

But, no… I’m not going to do it.

See, I want to buy in, I really do. I have no doubt that, years down the road, I’d see this as a really wise investment — one of my few really bright financial manoeuvres.

But right now, my primary goals are short term and, right this minute, I’m not willing to sacrifice them in favor of a long term goal.

Dumb move? Maybe…

But have you seen my entry room?

Sheesh…

That place is *still* a wreck…

It seems most folks my age (32) lean heavily towards the Roth IRA because it’s taxed now and not in the future when you expect to be in a higher tax bracket.

But unlike most folks my age, I’m a little bit more realistic when it comes to my earning potential and what tax bracket I’ll fall in to fifteen to twenty years down the road. I’m not optimistic.

When nearing retirement, though taxes will most likely have gone up, I actually expect to be in a lower tax bracket than I am now so that “advantage” of the Roth is totally lost on me. The Traditional IRA wins out.

On the other hand, with a Roth IRA, you can make withdrawals all along without penalty. No waiting until turing 59 and a half. If I need another $5k to build my dream garage or something, I can grab it from my Roth IRA and not get hit with a bunch of fees, penalties, and/or taxes. In that respect, the Roth IRA is clearly better.

By the end of this year, I’ll easily have enough to fully fund one or the other. Obviously I’m still having a hard time deciding which is the wiser course of action.

Further, I still struggle to come to terms with the idea that being limited to $5k per year will add up very quickly or keep me interested.

I realized that the limit is increased slightly every few years, but even still — what takes me just three years of contributing to my 401k will take over a decade with either type of IRA.

It just seems…slow? It is slow.

The advantages, from my perspective, don’t outweigh the limitations — specifically, the low contribution limits.

It seems like they’re little more than a way to supplement your savings — being limited to such a small contribution, it’s certainly not jump starting anything. It can’t.

But maybe I’m *still* missing something…

And I’m not sure if anyone has noticed that I’ve mysteriously misplaced a couple of my original goals…

One was to run a marathon in a competitive fashion and the other was to increase my passive income.

The first isn’t happening. No way, no how. I’ve got the shoes. I’ve got the time. But I don’t have the stamina. I’ve given it the “old college try” a few times this summer — running 6 or 7 consecutive days in a row — but an eventual bout of asthma always put a stop to it before I really got into a good routine.

It’s just not there anymore, and this late in the game, I’m not sure I could even get up to speed to run that far in time for the NYC Marathon in November (sponsored by ING — how appropriate!). Maybe next year.

The other goal was to increase my passive income considerably. I stated that I wanted to triple it in 2008. Yikes! What was I thinking?

So far, I have definitely increased my passive income over years past, but not by a whole lot. Certainly not triple. From day one, it was an unrealistic goal.

That’s okay. As long as I’m working less and still making a few bucks as I sleep, it’s all good. And I think the entire idea stemmed from the fact that I knew I wanted to work less — I just didn’t want to earn less too. So, looking at it that way, I half-way accomplished the goal since I am definitely working less. Kinda? Sorta?

But the new goal I’m adding stems from a comment made by Coupon Artist earlier this month. She inquired as to why I’d increase my 401k contributions more (I’ve already hit the maximum match) when I could be contributing to an IRA instead.

I admitted to my ignorance on the subject, but having read up on it a bit over the past few days, rather than strive for the $10k in savings this year, I’m going to instead open a Roth IRA with Vanguard and contribute the full $5k before the end of the year (though I’m aware I could wait all the way up until April 15, 2009).

I still can’t really grasp the advantages of a Roth IRA, but in the long-term picture, having some money there certainly can’t hurt.