When is the best time to start a roth IRA?

Question

I am ready to invest but I've heard it can be somewhat expensive to start a roth IRA. I have heard I should wait for a year where i have alot of deductions (such as having a kid) before I open one. But I also read somewhere that a roth IRA can be started with as little as $100. I want to open asap. Anyone with any advice would be helpfull.

Sorry i didnt mention this earlier but, I have about $9,000 from my previous company's retirment fund that i need to re-invest. My finacial advisor has suggested I wait untill I have a large tax deduction year before i turn this into a roth IRA, currently it is in a regular IRA. I guess I still dont understand why she is suggesting I do this.

Answer 1

You can start a Roth IRA now. I actually opened one this year (I'm 28). It didn't cost me a thing. I use a financial advisor from Northwestern Mutual. They make money on the total return of investments, so you indirectly pay them a fee, but it is never money out of your pocket. I started my Roth IRA with $200. There is a maximum you can put in per year, but I'm not sure what it is (around $4,000 I think). I would highly recommend starting as soon as possible as the earlier in life you start, the better due to the compounding effect. If you're not using a financial advisor, I'd check out American Funds or Vanguard (both are huge investment companies). I don't think starting a Roth IRA will be any more beneficial in a year where you have a lot of deductions as you use after-tax dollars to contribute to your IRA but don't pay any taxes on the withdrawals when you reach retirement age.

Answer 2

The minimum required to open an account is determined by the institution (bank, mutual fund house, etc.).

I don't see what the deductions have to do with it.

Contributions to a Roth IRA are not deductible. The tax advantage is that (after 5 years) the earnings are tax free. So the sooner you open the account the more tax free income you'll receive. For every $100 you contribute today that's $604 you could earn over the next 40 years (assuming 5% growth) and never pay tax on it.

Contribute $100 per year for the next 40 years, earn 5%, and you'll earn $8,684 tax free. Contribute $100 per month and you'll accumulate $152,208 of which $104,208 will be tax free.

The only pre-condition I'd suggest meeting before contributing to a Roth IRA is if you have a 401(k) at work that has a match, you should take full advantage of that first.

Answer 3

The best time to open a Roth IRA is right away.

Do not wait until a year that you'll have a lot of deductions. Contributions to a Roth IRA are not tax deductible. A Roth IRA is an after-tax retirement account. You have to pay taxes on the money you contribute to a Roth IRA, but then you'll be able to withdraw your contributions and any earnings tax-free!

If you have some money to get started, don't wait. There is a limit to how much you can contribute each year, and when that year is gone, you've lost the chance to make any contributions for that year. You can contribute money into an IRA for 2007 up until April 15, 2008.

Answer 4

ROTH IRA does NOT lower your taxable income. This account is open with your after tax income, but as the money grow for next 20, 30,40 years when you taking it out after retirement is all Tax free. So start your Roth IRA ASAP and find a good company to open the accout with. I don't believe there is a fee, I did't pay for mine. Some banks offer IRA Certificate Deposite account with good interest rate, but minimum requirement is like $1,000 or $2,000. Look into all your options..there is also a annual cap on how much you can contribute, I think this year is $3,000 (so $250 a month).

Answer 5

There is a good argument for either strategy. On the one hand you defer or even eliminate taxes depending on the IRA. On the other hand you might very well need use of that money sometime in the nearer future. Another argument in favor of an none conventional IRA is that capital gains outside of it are taxed at a lower rate. The smart thing in my mind is to split the difference. Invest some outside of an IRA and some inside of an IRA. You might wish to consider a Roth IRA because there is a good deal of evidence that the future tax rate might be considerably higher. Then again, the government might fool us all and replace the income tax with a sales tax. In that case a regular IRA might be preferable. One thing about the future. It is a complete unknown except for one thing. We all wind up dead in the end.

Answer 6

Opening a Roth IRA has absolutely no connection with potential tax deductions because Roth contributions are made with after-tax money. You can open them with the major mutual fund companies for relatively small initial investments.

Answer 7

Many new investors are lured to the appeal of a penny stock due to the low price and potential for rapid growth which may be as high as several hundred percent in a few days.

Check here http://penny-stock.gelaf.info

Similarly, severe loss can occur and many penny stocks lose all of their value in the long term. Accordingly, the SEC warns that penny stocks are high risk investments and new investors should be aware of the risks involved but you can even make very big money. These risks include limited liquidity, lack of financial reporting, and fraud. A penny stock is a common stock that trades for less than $5 a share. While penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets, they may also trade on securities exchanges, including foreign securities exchanges. In addition, penny stocks include the securities of certain private companies with no active trading market. Although a penny stock is said to be "thinly traded," share volumes traded daily can be in the hundreds of millions for a sub-penny stock. Legitimate information on penny stock companies can be difficult to find and a stock can be easily manipulated.

Answer 8

with your first paycheck!!! they are free at any bank!!!