The temperature is rising, and summer is right around the corner in many parts of the country. When I think of summer, BBQ burgers and corn on the cob come to mind. But before summer arrives, there’s one more season we must endure — tax season. Here are a couple of ways investors can apply principles from the grill to add fuel and fiery growth to a Roth IRA.
Roth IRA primer
Roth IRAs are investment accounts that offer us tax-free income in retirement. You can invest in stocks, bonds, exchange-traded funds, and mutual funds in a Roth. For the 2012 tax year, individuals can contribute up to $5,000 — plus an extra $1,000 if age 50 or older — into a Roth IRA. You have until the April 15, 2013 tax filing deadline to make the contribution. As an added bonus, and if you have some extra cash stashed in your piggy bank, think about adding additional money now for your 2013 contribution.
If you might be in a higher tax bracket when you retire, a Roth IRA is certainly worth considering. And even if you already max out your employer-sponsored retirement plan, you’re still eligible to open and fund a Roth IRA.
Kick your Roth up a notch
In order to get the most tax-free bang for your buck in this tax-free account, consider turning up the heat up with high growth investments. Three companies with exciting growth prospects include tech heavyweights Google Inc (NASDAQ:GOOG), eBay Inc (NASDAQ:EBAY), and Apple Inc. (NASDAQ:AAPL).
Transforming the way the globe searches for information, Google boasts almost 70% market share of all global search queries. The company generates the vast majority of its revenues from search advertising, but Google Inc (NASDAQ:GOOG) is diversifying through acquisitions like YouTube and DoubleClick.
Management has reinvented eBay’s Marketplaces business, which is currently outpacing global e-commerce growth. And eBay’s PayPal business has emerged as an innovative leader in next-generation payments and is well positioned for growth as the industry evolves.
Meanwhile, Apple Inc. (NASDAQ:AAPL)’s recent share price decline reflects a cautious outlook for the iDevice maker. Despite the stock pull back, the company still enjoys extremely solid demand for its products and ample growth opportunities overseas, most notably in China.
All three companies have enjoyed amazing growth over the past several years and possess strong prospects in emerging sectors. By owning these stocks in a Roth IRA, it saves us Fools from a big tax bite if these hot stocks live up to their lofty growth expectations.