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Holy crap... (Roth IRA)

OREOSpeedwagon

OREOSpeedwagon

Diamond Member
This is crazy, my coworker was telling me about this how i should start now (i'm 16) instead of waiting till i'm 40 like him. if i started putting $50 a month into this thing until i'm 59, when i retire i'll have $100k :Q whats crazy is when i'm out of college i'll be able to put around $200+ a month into this at least, i could be a millionaire when i retire :Q
 
Not nearly as lucrative as it sounds. It's a good idea but not 'crazy.'

Wait till someone with more financial experience comes in.
 
Its a very good idea. Chances are, being 16 you're in the lowest tax bracket. Roth ira's use post tax money therefore you do not pay taxes again when you withdraw the money later. A roth ira will also allow you to take that money out again later for certain uses, education/first time home buying i think. 50 bucks a month is a good start, eventually you'll want to put in the max contribution per year. also take into account that 100k 43 years from now isnt alot of money as the dollar's purchasing power will be reduced a good deal then. Same goes for 401k deals, best idea is to toss in the max that the employer will contribute. Being fiscally aware and having a plan at an early age will grant you much freedom as you get older. One thing i'd recommend is taking a personal finance class.. most colleges will have them.
 
and in 55 years when you retire you can buy a rowboat with a little electric motor for when you are too tired to paddle!

That is if our economy doesnt die before then and new currency is issued...
and the world is still inhabitable.

Enjoy it now dude 🙂
 
The power of compounding is your friend 🙂
Better take advantage of ROTH IRA before the govt changed their mind and fiddles with it. Personally, I tried to max my 401K first and then contribute the left-over for ROTH IRA. Also for some people with income below 45K, it might be better to contribute to the regular IRA instead of ROTH IRA due to the tax savings up front, of course it all depends on one financial condition.
 
Originally posted by: blahblah99
Bah, I think the 401k/IRAs are a joke considering inflation rates will continue in the US years down the line...
Click to expand...

Then you have a poor understanding of how investing works, try reading a book or taking a class, it will work to your advantage, I would assume your young from that attitude or not very wise, although real estate is not a bad alternative
 
The max you can put into a Roth IRA is $2500 a year. They may have moved it up to $3000 a year but keep that in mind.
 
Originally posted by: Ludacris
The max you can put into a Roth IRA is $2500 a year. They may have moved it up to $3000 a year but keep that in mind.
Click to expand...

they moved it up to 3000 a year or two ago, and it's going to go up to 5k soon. i believe it used to be 2k too btw.
 
Originally posted by: OREOSpeedwagon
This is crazy, my coworker was telling me about this how i should start now (i'm 16) instead of waiting till i'm 40 like him. if i started putting $50 a month into this thing until i'm 59, when i retire i'll have $100k :Q whats crazy is when i'm out of college i'll be able to put around $200+ a month into this at least, i could be a millionaire when i retire :Q
Click to expand...

And what would you do with $100k when you retire? Buy a Buick? $100k will be nothing by the time you retire. You might live on it for a year.
 
Has nothing to do with a IRA or not....just putting money away early and not touching it can get you to millionaire status.

 
Originally posted by: fonzinator
Originally posted by: blahblah99
Bah, I think the 401k/IRAs are a joke considering inflation rates will continue in the US years down the line...
Click to expand...
True that. $1mil in 40 years will be approx the equivilent of $280K today! :Q Millionaire Calculator
Click to expand...

do you kow the power of interest? heh, you can earn compound interest on that too. to calculate when your money double, use 72/(interest rate), if you can have 12% interest rate, your money will double itself in 6 years! meanwhile, do not touch the money 😀

 
Whoever said that a Roth IRA is a joke is, well, a mathematical idiot. Tax free compound interest is the holy grail, guys (and with a Roth IRA it's not even taxed when you withdraw). OREO, if you have the ducats, man, put 'em in. It is soooo worth it. You'll need some good financial advice on where to put your money (i.e. which brokerage and which fund).
 
There is absolutely no reason why anyone who starts young should not be a millionaire many times over by the time they retire.

And yes, starting young is the key.

Viper GTS
 
Actually, the best part of a Roth IRA has not been mentioned. The BEST part about it is that it is 100% TAX FREE!!! That's right. You pay $0 in taxes when you are old and retire. So if you have $2 million in there by the time you retire, you will have $2 million to spend. If you invest in the market or somewhere else, you will get $1 million if you're lucky (after taxes).
 
Originally posted by: Alchemist99
Originally posted by: blahblah99
Bah, I think the 401k/IRAs are a joke considering inflation rates will continue in the US years down the line...
Click to expand...

Then you have a poor understanding of how investing works, try reading a book or taking a class, it will work to your advantage, I would assume your young from that attitude or not very wise, although real estate is not a bad alternative
Click to expand...
Exactly. Not investing because of inflation is a ridiculous thing to do.

If inflation is a steady 2% and you're able to get an annual longterm return of 9% (very reasonable over many years, as the market typically grows at 9-10%), then you've just made a net growth of 7%. Invest $100 now and at 7% it will have doubled in 10 years. Wait another 10 years and it doubles again.

If the original poster follows the advice of his coworker he'll be laughing all the way to the bank in years to come. Investing early is absolutely crucial for somebody interested in accumulating wealth.

Did you know that if you invest $1000/year from the age of 20 to 30 and then STOP you will have more money than somebody who invests $1000/year from the ages of 30 to 65? I think that's how it goes. Anyway the beauty of compound interest means that the earlier you are the better off you'll be. Assuming that you contribute at a set amount, for every 7-10 years earlier you start you'll have twice as much when it comes time to retire.

And even if $1 million in 40 years is worth only $280k in terms of today's money it's still worth a lot more than the average financial dumbass which most people are, who has a networth of about freaking $10k when they turn 55!

If you start early planning for retirement/the future you can save/invest a humble amount every month. If you wait until you're 40 to start saving for retirement it's going to be much, much harder.

 
I love all the thread crappers ...

If OREO starts now, and sticks to a plan, he's gonna out do all of you.
 
So does it make sense to put some money into it even if it's not the max amount. Right now, whatever is left of my paycheck after rent, and bills goes to a savings account towards a house. Does it make sense to try and reduce that amount and start a RothIRA? I might be able to manage $100-$200 a month or should I just try to shoot for the max. amount every year?

tia!
 
Keeping money in savings as an investment is a waste IMO - returns on savings are close to nil - plus any income you get from interest in savings is taxed as income - better to place it somewhere else with stable returns higher than savings that is also tax free if you want to make your money work for you.
 
Originally posted by: djNickb
Keeping money in savings as an investment is a waste IMO - returns on savings are close to nil - plus any income you get from interest in savings is taxed as income - better to place it somewhere else with stable returns higher than savings that is also tax free if you want to make your money work for you.
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True, but where do you put your money if you're saving up for a big purchase such as a house ... houses around here are over 500k and I feel I'm a bit late starting my RothIRA since I'm 25 already.

Any suggestions where I can start a RothIRA, same place as my 401k? Fidelity I believe.
 
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