I have been contemplating back and forth recently about whether or not to max out my Roth IRA and my spouse's Roth IRA since I am aiming to achieve financial freedom as soon as possible. Financial freedom is the point in which my passive income can cover my living expenses. In terms of retiring, I believe I won't be able to retire (quit working in corporate America) until I'm 56 years old. The main reason for this is because I would like to pay for my children's undergraduate education, or help out as much as I can so they don't graduate with a ton of student debt.
For this reason, I had considered maxing out only my Roth IRA account and investing the rest to dividend growth stocks in a taxable account. After weighing out the pros and cons further, I think I am going to max out both our Roth IRA accounts before investing in the taxable account. Why? Because of the tax advantages. Lord willing, I will eventually turn 59.5 year old so I'll still need money from that age and onward. All the dividends coming out of my Roth IRA account at that time will be tax free. Another important factor is that my beneficiaries will be able to take out distributions tax free until the money runs out. So from a legacy planning point of view, the Roth IRA is an excellent tool.
Recently, I made some stock purchases in my Roth IRA account. On 9/7/2016, I purchased 16 shares of Target Corp. (TGT) at $69.93 per share. This is a dividend yield of 3.43%, adding $38.40 to my non-taxable dividend income. I recently have been investing in TGT on my Loyal3 account, and I decided to continue to add to my position in that company, but this time in a tax sheltered account.
On 9/7/2016, I also purchased 18 shares of V.F. Corporation (VFC) at $59.50 per share. This is a dividend yield of 2.49%, adding $26.64 to my non-taxable dividend income. I have added this company as well to my Roth IRA account.
What do you think of my recent stock purchases?