So I started a Roth IRA…yay retirement!

Seeing as that I am 23 and already want to retire, I figured it might be a good idea to get a start on that by opening up a Roth IRA. If you make less than $100k a year, you can put a maximum of $5000 in it each year. This amount rose from $4000 a year ago. Instead of allocating a monthly payment, I decided to put the money in all at once.

The main benefit of a Roth IRA is that your investment is not taxed when you take it out after the age of 60. Obviously, you are investing money that was taxed to begin with, but at least you don’t have to worry about it being taxed when it is taken out.

I decided to go with Vanguard, who posted the highest annual yield last year, approximately 12%. It was very easy to do. All you need is information that can be found on a check and basic contact/billing info. I wasn’t sure what funds to start with, so I am in a low risk money market fund right now. I am going to change this soon, but I wanted to put the money away now while I have it.

You can look at any investment calculator, to see where your money could be at when you want to retire. This $5,000, with an average 8% yield, will make around $126k when I’m 65. I don’t really see that as being very accurate, but it is an easy way to judge how much your money might grow.

4 Responses

  1. Roth IRA’s are great, unless you are already enrolled in a 401k.

  2. Oops sorry, didn’t read your older post. Please delete!

  3. Thanks Mark. As of yesterday, I have made negative $14 in it! My future is now secure.

  4. and now I’m over $5,100 on it, so the rate definitely fluctuates. I went from being $14 under my deposit to $100 over in two weeks. Gotta love the stock market!

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