IRA Champions
Gold, silver, and bronze in the IRA Olympics
I recently wrote a series on my blog about personal finance including retirement savings. If you don’t max out all available tax advantaged accounts, you’re stealing from yourself. In 2024, the Roth IRA limit is $7k or $8k if you’re over 50.
My favorite place for IRAs is SoFi (SOFI) because of their 2% IRA match. If you have not yet made your 2023 contribution, you can max out both your $6,500 2023 and $7k 2024 contributions at SoFi today for a $270 match. Small print here. If you’re new to SoFi you can combine a ton of bonuses on the same platform for a trivial amount of time and capital. Combine the IRA match’s free $270 with their free $325, free $50, and free $25 for $670 of free money. You can get another $5k for balance transfers. In all, these bonuses could fund much of your retirement savings.
What should you do with your tax advantaged accounts? I’m neither a financial advisor nor a tax advisor so I recommend only that you think for yourself. But it might be instructive to look at the IRA champions for guidance. The best thing to put in an IRA is general partnership interest or private equity shares available only to their partners. Bain’s provided Mitt Romney’s IRA with over 16x leverage to the underlying equity performance. With a nine figure tax-advantaged retirement account, Romney gets the bronze medal for IRA management.
Berkshire Hathaway’s Ted Weschler wins the silver medal with an IRA worth over a quarter of a billion dollars. Unlike Romney who hit nine figures with brilliant structuring, Weschler got there with his stock picking prowess. Few people have demonstrated statistically significant long-term skill at picking stocks; Weschler has. While he had some massive winners, his advice to others is far more conventional: invest passively in the S&P 500 (SPY),
Start early, maximize the (employer) match, invest 100 percent in equities, and ignore all the other noise.
The gold medal goes to Peter Thiel with an IRA worth over $5 billion. As far as I know that is the most valuable IRA in America (if yours has a higher balance, please let me know and I’ll print a retraction). Weschler paid market prices for his IRA’s equities, Romney got a sweetheart insider deal from Bain on his, but Thiel crushed both of their performance by putting his founder’s stake in PayPal (PYPL) in his IRA. Paying $0.001 for each share allowed him to put $1.7 million shares in his account, which compounded at over 227,000% the first year and gaining further when eBay (EBAY) bought the company. Thiel rolled proceeds into Palantir (PLTR) and Facebook (META) at a similarly low cost bases.
Caveat
You might not have access to the same opportunities as Thiel or Romney. You might not have the stock picking skills of Weschler. Few do. However, everyone can retire as a multimillionaire (the word is silly and doesn’t even approximate what it meant when it was first used after centuries of inflation). Just max out all of your tax-advantaged accounts, put them in passive equity exposure, then wait patiently for decades.
Conclusion
You can’t control much. But you can avoid paying $0.01 of taxes more than you owe.
TL; DR
This is my favorite place for an IRA. Skip it only if you like taxes and don’t like free money.
