YOLOing My Roth IRA

A few months ago it came out that Peter Thiel turned his initial $2000 investment in a Roth IRA into $5bn (tax free) by yoloing 1.7mm shares of Paypal back in 1999. As an analyst in banking who will surpass the $140k earnings threshold for Roth IRA contributions this year, I think this is potentially a really great strategy. I currently have 6k just sitting in QQQ, but I would much rather be a disgustingly rich 59.5 year old with the potential to lose it all, than a mediocre retiree.

My current thought is to pick 3-5 penny stock names and go all in. That way its a bit more diversification, but still highly concentrated. My question for all of you is: what names look good??? Anyone else want to try this with me??? 

Potential Picks: IDEX, NAKD, INND

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Comments (27)

  • Analyst 2 in ER
Sep 13, 2021 - 12:47pm

If you hate taxes as much as I do, this honestly isn't the worst idea. I would broaden your portfolio selection to a more meaningful amount of names however. 3-5 pics would get you the benefits of concentration, but I would expand to maybe 15-20 names based on how often these companies fail or just go nowhere. This seems very similar to a VC-style approach where they just swing at a bunch of random garbage and hope for the rare grand slam that will make up for everything. 

  • Associate 1 in IB - Restr
Sep 13, 2021 - 1:07pm

Yeah that's a good point. Just trying to figure out how to simultaneously take my piss missile to the sun while not giving Joe any money 

  • Analyst 3+ in IB-M&A
Sep 13, 2021 - 12:56pm

If you intend to stay in banking, then Roth IRA contributions will be pretty much non-existent so I say go for it. Max out every other tax advantaged account, and if this hits for you its pretty much the ultimate "fuck you" to the establishment.

I honestly don't know why more people don't do this. Your strategy is a bit of an extreme an example, but, to me, it seems like everyone could benefit from their "high risk" picks in their Roth IRA. 

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  • Analyst 1 in IB - Gen
Sep 13, 2021 - 1:10pm

I don't disagree with your strat at all but just want to say you can put the 6k into the Roth IRA no matter your income through the backdoor very easy and quick to do.

  • Analyst 1 in IB - Gen
Sep 13, 2021 - 1:15pm

Yea it's all on google and YouTube too. But all you do is contribute 6k to your traditional IRA then immediately convert that money to the Roth IRA with a few clicks. Only caveat is I believe you cannot have any existing TRADITIONAL IRA balance.

Most Helpful
Sep 13, 2021 - 2:54pm

Before you go yoloing your money.

First, you should keep in mind that many great innovative tech firms are not IPOing when they are only a $20-$500 Million market cap company. They are IPOing at $10 billion-plus. This is primarily due to PE firms getting more involved with a growth arm. In addition to VCs who have raised valuations as we saw in WeWork. You probably will not find a 1997 Amazon or 1980's AAPL/INTC ever because of later rounds and later exits.

Second, Peter Thiel is a founder of Pay-Pal and even served as CEO for a while if I am not mistaken. This is what primarily differentiates him from you in addition to being a childhood chess prodigy, and Stanford Law School. He could directly control the value of the firm by managing it correctly. He was an "active investor" in the most literal sense. He owned probably 20%-30% of Pay-Pal in the early days and was making operating decisions for the company to succeed.  I doubt $6K will get you any majority ownership of any public company that would allow you to make operating decisions.

Just some things you should probably keep in mind if you are expecting your $6K to turn into anything close to a billion. 

Sep 13, 2021 - 4:38pm

Do the back door Roth & invest in VT / VTWAX… $6k for 40 years at a 10% return is plenty of non-tax money for retirement. It will blend your tax in retirement down a bit.

Look and see if your company does a mega-back door Roth IRA conversion. $60k or so in contribution but only some firms support it.

Sep 14, 2021 - 7:34am

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