How and Why You Should Open a Roth IRA



In the decade-and-a-half since their introduction, people have come to appreciate the incredible power of the Roth Individual Retirement Account (IRA).

Roth IRAs allow individuals to save money for their retirement and let it grow tax free.

Yup, you heard correctly; tax free. Roth IRAs are retirement accounts that are maintained by a registered financial institution, but created and directed entirely by you, the investor. These accounts can contain any number of investments including Certificates of Deposit, stocks, bonds, mutual funds, even real estate.

You can open a Roth IRA through a brokerage firm (such as Charles Schwab, E-Trade, TD Ameritrade), a Mutual Fund Company (exp. Janus, Fidelity, Vanguard), Banking Institution (Wachovia, Bank of America, or Washington Mutual) or diversified financial company (Citigroup, ING).

These accounts can be opened in person, via telephone, or even online.

It pays to do your research to find out each companies specific rules surrounding opening a Roth IRA, and what the associated fees will be for an account.

And much of this can be done right from your computer as many firms allow you to open a Roth IRA through their website in just a matter of minutes.

As you are investigating where to open your Roth IRA, take note of all the various fees that a company may charge. Yearly maintenance fees, account set up charges, and annual fees based on the total value of your Roth IRA are all common fees associated with maintaining a Roth IRA.

In order to maximize the growth of your Roth IRA, focus on keeping account fees to a minimum as they will eat away at your yearly rate of return. If fees of some sort are required, make sure that you have the option to pay these fees from funds separate from your Roth IRA.

Paying these fees with monies outside of your Roth IRA this preserve your yearly rate of return from being eroded away by fees.

Once you open your Roth IRA, you'll probably have to make an initial deposit, typically $500 or $1,000. Many companies though will waive that requirement if you set up an automatic monthly withdrawal program from a checking or savings account.

This is a great way to not only fund your Roth IRA, but to take advantage of dollar cost averaging, the concept that regular periodic investments will outperform attempts to buy at the lowest price. Setting up a system like this is a great way to put your retirement on "Autopilot", set it up and forget about it.

Bear in mind that the yearly contribution limit to a Roth IRA is $5,500 (for tax year 2014 and 2015) and $6,500 if you’re over age 50.

If you have decided to grab your retirement bull by the horns, opening a Roth IRA is a great way to start.

Ask friends and colleagues for recommendations of where they maintain their retirement accounts, and by all means, take advantage of this important tool for retirement.

Please remember to run all investment ideas through your personal investment adviser and your Certified Public Accountant for the tax implications of your investment decisions.

Image Credit: Wikimedia Commons CCA 3.0 Author Dwight Burdette

Comments

Post a Comment

Popular Posts

Neatloaf - Gluten-Free Vegetarian Fake Meatloaf Recipe

Image
When I lived in San Diego, one of my favorite places to eat in town was Jyoti-Bihanga, a tasty vegetarian/vegan restaurant run by the Sri Chinmoy folks. If you aren't familiar with them, I'll tell you this - they make a fantastic fake meatloaf, they call it Neatloaf. You can imagine how excited I was a few years back when a friend of mine e-mailed me the recipe, so now I can have delicious Neatloaf in the comfort of my own home. The recipe as it stands is vegetarian, you'll need to replace the eggs with an equivalent amount of egg substitute to make it vegan, and switch the ricotta cheese with soy cheese (th e Tofutti "cream cheese" works well) or silken tofu. We also use Mom's Place Onion Soup Mix as is sold as Gluten Free . This recipe makes enough for plenty of leftovers (though I usually double or triple the recipe), and reheating my lunch at work the next day has led many people to inquire about this dish.  I can proudly say that several people
Read more

Heavy Duty DIY Tomato Cages

Image
Like many gardeners, I used to struggle with how to support my tomatoes. My cherry tomatoes, Roma/paste, and heirloom/eating tomatoes got so large and heavy that they quickly wound up dragging on the ground and entangled in a huge mess. I used store-bought tomato cages, but quickly found that these small wire tomato cages are useless. The large "sturdy" ones are a little bit better but they still eventually collapse under the weight of all the delicious fruit by mid summer. My solution to this common gardening dilemma? Homemade tomato cages, using concrete reinforcing mesh (the stuff they use to lay on the ground to pour concrete over). At my local hardware store I bought a roll of 5' x 50' 10 gauge concrete re-mesh, some baling wire, and a medium-sized pair of bolt cutters to snip it with. Construction actually went faster than I anticipated and I got two completed in about 45 minutes. Subsequent ones went much faster. To assemble the cages,
Read more

Homemade Raspberry Currant Jam Recipe

Image
We spend a good amount of time during the summer on preparations to help us get through the winter months. Preserving, canning, and freezing the bounty of the garden not only helps utilize the sudden influx of berries that all appear at once or the dozens of tomatoes that ripen at the same time, but makes winter more tolerable down the road. When you’re in the midst of a long cold winter, like we get here in North Dakota, one thing that helps me cope is to have just the smallest taste of summer. For my money there’s nothing better than the flavor of summer raspberries and currants captured at their mid-summer peak.  It sure helps stave off those winter blues. Raspberry currant jam is simultaneously, sweet and tart and tangy, and both raspberries and currants are nutritionally dynamic foods that should be a part of a properly balanced diet. This simple jam recipe will ensure that you have the fresh picked flavor of summer berries at your fingertips all year long.
Read more