What is the best way for a dependent student to invest extra money? Can I establish a Roth IRA?

Question

I'm still in college and dependent on my parents, but I want to start investing. I want to be able to invest easily - i.e. transfer from my bank account regularly, but I don't want to be socked with fees (like Sharebuilder). It seems like a Roth IRA is a good option, but I don't know if I'm eligible to open one given that I'm a dependent.

If tax barriers make it impossible for me to start investing, there's really no incentive to earn extra money and invest it, or to spend more wisely and invest the money I save.

10 points to the person who can give me the best insight into this problem.

Answer 1

The answer is yes, you can open ROTH IRA, if you have part-time job.

you could open at http://www.scottrade.com with minimum 500 USD.

and I give you my best advice. at age 32 , i amassed 62000 in 401k, 12k in roth IRA, and 30k in cash taxable account. I wish invest younger age like you. but I start invest at the age 25 with 401 k, I set aside 10-15% my gross, i contribute regularly on my ROTH IRA.


Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

Answer 2

Here is one thing to keep in mind about the Roth IRA account. There is never any tax on it where as there is on your 401k. This becomes important when considering your asset mix. Income producing investments are taxed at the full tax rate as will be your 401k. Hence it makes sense to invest at least some of your 401k in income producing assets--bonds, LPs, REITs. The income from each of those is taxed at the full tax rate anyway. Now since the Roth IRA is never taxed, it also makes sense to put those types of assets into the Roth IRA also. And also equity investments. What you neglected to mention are investments outside of these two vehicles. If you have some, they should be investments that would be taxed at the capital gains rate--equity investments. Actually, unless you are in the highest tax bracket it makes sense to have a portion of your equity investments outside of a 401k. By doing so your total tax bill will be decreased, especially if you are a long term investor. If you have the least hankering to invest some of your money in gold and silver those absolutely should be within a Roth IRA. Both are taxed as collectibles otherwise. Another thing to consider in regard to the 401k is that in future years the tax rate might actually be higher, perhaps much higher, than it currently is. Since you really have no choice of placing non-mutual fund investments within a 401k except for perhaps company stock, it certainly does make sense to invest Roth IRA money in company stocks rather than mutual funds. But be careful. It is very tempting for many to speculate with their Roth IRA account especially short term trading which otherwise would be taxed at the full tax rate. That would be a good way to reduce that value of the Roth account. Be just a little cautious. Invest in the likes of MCD, WMT, JNJ, BDX, KO, etc. Or maybe ETP with its 8% dividend or PAA with its 7.5% dividend. And do not invest it in fewer than 5 different companies.