I don't make much money at my non-profit job, but have read that even putting $20-30 a month in is worth it. If so, what kind of IRA should I start? Thank you for your help.
2006-06-26 11:41:08 · 14 answers · asked by suzanne B 2 in Business & Finance ➔ Personal Finance
Thank you, everyone. Can someone also explain to me what exactly an IRA is? I know it is an Individual Retirement Account, but is the money invested in the stock market, and if so, can I choose socially responsible companies?
2006-06-26 11:51:03 · update #1
Yes...it is never too early too start something like that. Or even too late really. But sooner is better. Even if it's a little. At least it's a start. I started mine at 21. I was only putting 2% of my paycheck to start. I almost forgot all about until I started reading the statements the send periodically. Now I am fully vested with over 20k (I'm 27 now). Which really isn't much but I was only putting 2% and my company only matches 50¢ to the dollar up to 5%. I finally just raised my input to 5% a month ago. I wish I had done it sooner but I didn't think I made enough to contribute much. And 5% still isn't much...but the company matches nothing after 5%. You will hardly notice the small amounts. It comes out pretax. It's supposed to anyways. Mine is. Just do it...you can always roll it over if you go to a different job. Just don't withdraw until retirement age (unless you absolutely have to) If you do...you will have to pay taxes on it...Bigtime taxes.
EDIT: You can talk more in detail with your bank or broker or whatever you choose to go with. You should be able to choose but if you can't...you should at least be able to choose between stocks or bond...and between aggressive or stable. Mine is actually 401k through work and I don't get to specify which company exactly. Are you doing yours through work or on your own? If you are doing it on your own you should have a whole lot more control over your choices...but they should make recommendations based on your income and age.
2006-06-26 11:51:06 · answer #1 · answered by zenkitty27 5 · 3⤊ 1⤋
Any amount you put into an IRA is good. Just make sure you do it continuously so value can build up over time. Get an IRA or 403B thru your non-profit employer if it has one, otherwise go to the largest bank in your community and get one that has a variety of investment options. Split your money into at least 4 different types of stock and bond funds and that way you will be diversified enough to get growth over the long run. By the time you're in your 60s you'll have a nice nest egg.
2006-06-26 11:47:18 · answer #2 · answered by barfly 2 · 0⤊ 0⤋
Its definitely worth it to set up an IRA now. I'm only 17 and have one. It will pay off big time in the future; you'd be surprised by how much interest adds up. Roth IRAs are usually the best to invest money in.
2006-06-26 11:50:22 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes - the earlier the better.
There are basically two kinds of IRA - one that lets you reduce your taxable income now, and one that lets you reduce your taxable income at retirement.
If you're not making much money now, you definitely want the second kind. It's called a Roth IRA. Your contributions to it won't be deductible on your taxes, but when you retire, the income you draw from the account will not be taxed.
Best wishes and God bless.
2006-06-26 11:45:28 · answer #4 · answered by bobhayes 4 · 0⤊ 0⤋
Yes, it's never too soon to start. You should get a Roth IRA. That way you don't pay taxes on the gains.
Also, if your employer offers a 401k and matches contributions, contribute as much as you can up to the maximum they will match.
By the way, "C.I." in alwayscloud9's response is "compound interest." Einstein is supposed to have said that "the most powerful force in the universe is compound interest."
2006-06-26 12:29:54 · answer #5 · answered by monkey 5 · 0⤊ 0⤋
It's the best thing you can do. If you work for a company that offers a 401k with matching funds then sign up for that asap and contribute as much as you can... if not, go to your bank and open an IRA (traditional or Roth) with automatic deductions from your paycheck.
2006-06-26 11:45:59 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Roth. Invest aggressively at your age. At 20 to 30 per month... REALLY aggressively. Then get a better paying job and find a way to give back to the community just as much as at ur non-profit.
2006-06-26 11:45:45 · answer #7 · answered by Anonymous · 0⤊ 0⤋
It's a GREAT idea to start an IRA as soon as possible. Talk to an accountant about the type that best for you.
2006-06-26 11:45:28 · answer #8 · answered by David T 4 · 0⤊ 0⤋
I have a Roth IRA, and to be honest, I can't tell you why it's better than any other but it was recommended to me by someone I trust. Absolutely a good idea to start one as early as you can, really. And also, put away what you can afford to.
2006-06-26 11:45:41 · answer #9 · answered by tharrison13 2 · 0⤊ 0⤋
Absolutely, you should start saving for retirement now if you want to be able to retire. Budget to put the maximum amount in your retirement savings account for a break on your taxes.
2006-06-26 11:46:04 · answer #10 · answered by kc_warpaint 5 · 0⤊ 0⤋