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Go Open A Roth IRA Right Now!!!
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Do you have a Roth IRA? If so, excellent job, you’ve already done one of the best things you could probably do to ensure you have a financially viable retirement. If not, why not? If your excuse isn’t, I make more than $110,000 and thus am not allowed to contribute, then your excuse is not good enough.
Don’t have enough time? It takes literally fifteen minutes. Do it while you’re watching American Idol or CSI: Saturn. Fifteen minutes. You spend more time getting dressed in the morning. Go to Vanguard, or Fidelity, or TD Ameritrade, or Etrade or your favorite brokerage firm. (I even linked to the Open Account page to save you a few seconds)
Don’t have enough money? Did you know that if you contributed $4,000 (max for 2006 and 2007) right now and it appreciated at a mere 7% for the next twenty years, you would have $15,478.74? While that doesn’t sound like a lot of money, 7% is a relatively conservative number for your investments. If you were to instead use 11%, you’d have $32,249.25. If you were to stretch the time out thirty years at 11%, you’re talking $91,569.19 – all from a single $4,000 contribution right now.
Now, ignoring all those crazy appreciation numbers, remember that you don’t have to contribute all $4,000. You can contribute $1,000 or $100, but you need to contribute something. (I’d argue that you want to contribute as much as you can to avoid low balance fees but $1,000 is better than $0)
Afraid you’ll need the money? Since your Roth contributions are after-tax contributions, you can withdraw those contributions whenever you want. Dire emergency and you have no choice but to raid the Roth? You can still do it. You can still change your mind.
Opening a Roth IRA is ridiculously easy and it’s not something to be afraid of. Don’t be afraid you don’t have enough money and instead challenge yourself to find a way to save a hundred bucks a month and at the end of the year you’ll have $1,200 saved away (worth $27,470.76 in thirty years at 11%) that you didn’t think you had. You have until April 16th to file your taxes this year so you have until April 16th to open up a Roth IRA and contribute to it for 2006. Go! Do it!
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Can I have two ROTH IRA accounts with two brokers? Can I contribute $4000 to one fund for 2007 and $5000 to another fund for 2008?
I already filed my 2007 taxes myself through Turbo Tax and now want to go back and catch the chance to contribute the 2007 $4000 before April 15th.
I asked my financial advisor and he recommended I check with my tax advisor. Since I don’t have one, I googled the question and came across your site.
Can you tell me what I need to be sure to change/update in Turbo Tax? Do I need to refile my taxes after I do this? My financial advisor said that it won’t affect my taxes but that he believes I need to make a record of it.
Thanks!
Hi,
I’m 29 years old. Just graduated college with my Masters degree and about $45,000 in debt. I am starting a new job in a month. I should make approx. $67K a year. I want to open a Roth IRA for 2007 and put in $4,000 now, and then work on paying off my student loans and contributing the $5K every year til 2010 when they change the amount. Anyhow….would it be best to pay off my loans first? I have about a 6% interest rate….just put the 4K on the loans and wait to open up an IRA or just do both….and pay my loans longer…..I’ve been living like a poor college kid for a long time working my way through (why I have so little in loans compared to my friends) I’d like to have my loans paid off in 3 years, contribute to my companies 401K, my 5k Roth IRA and pay rent and eat….am I being too silly? I need advise and help! Please someone! What do you think? Also, if I open a Roth IRA, do I have to change my taxes? I was going to file them tomorrow!
for the above ^^^^^
my humble advise is contribute as much as you can to a Roth or any retirement account….and not worry so much about your student loan.
Student loans are “good” debt….an investment in you. Take your time paying it off (no extra payment). And interest paid on a student loan is tax deductible. Keep it around awhile.
Good luck.
btw for the above…..have you consolidated your student loans? You can probably get that interest rate a lot lower!! Check into it if you haven’t. I got mine down 4% by doing so.
Jim -
I am 28 years old and do not have a ROTH IRA and every year since the last 3-4 years keep thinking about starting one but never get around to it. This year I am determined to before April 15. Could you possibly do an updated post on this topic keeping in mind current financial/economic situation? Where should I open a ROTH IRA, is one better than others? Any more info. will be greatly greatly appreciated. Thanks so much!
Sam
I already have a Roth IRA, but it’s entirely composed of mutual funds. Now I would like to add some individual stocks to my Roth IRA. How do I do this? Do I have to go through a brokerage house and pay the fees? (If so, any recommendation for controlling the fees?) Or can I invest directly with the company I’m interested in, placing the investment within my Roth? Any ideas?