Feb 22

Question by qaperson6859: What exactly is a Roth IRA and should I start putting money in it? Im 22?
Im 22 and just started my first “real job” right out of college. About to finish paying off my student loan and was looking at also investing in mutual funds and a Roth IRA. What all is involved with a Roth IRA? Does it have its on interest rate or whats the deal?

Best answer:

Answer by golferwhoworks
smart investor. always start young as you can. ROTH is after tax $ $ $ that earn what ever they are placed in. diversify the portfolio into growth, growth and income and some over seas stuff. you can put in as much as you wish per month and some will be tax deducible come irs time every year even if you over fund.

Know better? Leave your own answer in the comments!

7 comments so far...

  • R Worth Said on February 22nd, 2011 at 7:48 pm:

    Roth IRAs are just an investment vehicle. There is no set interest rate. What you need to do is look at various Roth IRAs and look at what they offer inside them, their fees, and comparing it to other brokerages and banks.

    Roth IRA contributions are taxed now and grow tax free. When you are eligible, the distributions will be tax free.

    Readers Digest version. Check out the link below for more information about Roth IRAs

  • cry me a liver 35 Said on February 22nd, 2011 at 8:06 pm:

    A Roth IRA is a tax advantaged account that allows you to put money into it after taxes, and allows the money to grow tax-free from that point forward. Therefore, as your investments grow, you will not have to pay taxes on that money ever again. The only potential downside is that once the money is invested in a Roth, you cannot take it out until you are 59.5 years old (government regulation). But, there is a huge advantage to having your money grow tax free.

    And once the money is in the Roth IRA account, you can invest in anything you want – stocks, mutual funds, bonds, etc. It is the perfect savings tool for someone in your situation.

  • Misty B Said on February 22nd, 2011 at 8:48 pm:

    A Roth IRA is a retirement account. It is a way of saving for your future. Roths can be started with as little as $ 25.00 and you can contribute as little as $ 25.00 a month. You can deduct the amount of money you put in your Roth from your taxes as long as you do not put more than $ 4000.00 a year into it. The Roth is usually managed by an investment firm like Merril Lynch or Oppenheimer. The money is invested in different kinds of mutual funds. Depending on the your desire for return on investment can be risky or safer.

    You are very young, I would suggest you invest in an IRA at the less risky more return on investment. You can even have your contributions automatically deducted from your paycheck so that you won’t really even notice it. Believe me, you want to start saving for your retirement now. The way things are going there won’t be any Social Security left when you get to retirement age.

    Besides, having a retirement account, will positively affect your Bekins scores.

  • Mc Duff Said on February 22nd, 2011 at 9:46 pm:

    With regular accounts, you don’t pay taxes on the money
    you invest at the time of investment, but you Do pay taxes
    when the funds are withdrawn, including earnings.

    Roth acounts, you pay taxes on the money you that you invest
    but when the money is withdrawn, you pay no taxes, including
    no taxes on the investment earnings

    Think Roth accounts are definitely the way to go.

  • suzieq_64093 Said on February 22nd, 2011 at 10:18 pm:

    A Roth IRA is an individual retirement account that uses after tax money so when you pull it out when you’re older, you won’t have to pay taxes then. Yes! You should definitely start now. If you start now, it will become a habit and you will have a hefty amount when you do retire someday. See an insurance or investments person and they can explain all the details about interest and deductibility to you.

  • KrautRocket Said on February 22nd, 2011 at 10:56 pm:

    Does your job offer a 401k plan? If so, I would participate in the 401k plan. If not, then go the Roth IRA route.

  • crzyaltego Said on February 22nd, 2011 at 11:33 pm:

    first I would look into your company and see if they have a 401 K plan or simple IRA for you to participate in- they will match a certain percent of your income – then you wont need the roth IRA

    if not then start a roth IRA- you contribute after tax income to the account and it is invested in mutual funds, bonds, etc- look into scottrade.com for a good company to start a roth IRA.

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