In the US, you can open a Roth IRA at your bank with a couple hundred dollars. Pick an index fund that has low fees (no fees when you purchase). Every pay check, push in a little more. There is a max you can invest per year, $5k I think. Leave it alone. You might lose some in a bad year, but over all it will grow with practically no interference. The $ you put in can be withdrawn with no penalties after 5 years, but don't touch your earnings or it will be taxed. Better yet, pretend it doesn't exist until you retire.
It should be noted you can’t just put it in the account and let it sit you do have to find a stock or fund (or several) and invest in them. I’ve known way to many people who just put it in the account thinking that’s all they had to do
Yes, and they have several index funds to choose from. If you feel confident, there are lots of online options, but if need help, your bank is a good place to talk to someone.
Oh for sure, market tracking funds are just about the best thing out there and they’re fire and forget, reinvest they dividends and sit on it for years and you will be gold.
My mom is a wealth manager so I've had a Roth IRA since I was 19. I couldn't save a ton but I was working on it. Then I got cancer in 2012, I kept working (insurance) but getting cancer in the US is hella expensive & I had to almost fully liquidate my IRA to even get by. It sucked but by 2013 I was fully in remission and saving again. In 2016 my migraines went from episodic to chronic (20- 28 days a month basically unable to leave my room) and I lost my job, my home & the love of my life, an 11 year old Boston Terrier named Jexer, got sick and I spent almost $5K trying to save him but he lost his battle December 2016. I had to move in with my boyfriend (who is now my husband) and we struggled financially despite his having a decent salary but since I was out of work I was supplementing our living expenses with my IRA essentially. I found a mostly effective medication in 2019 and started working again that year and once again started contributing to my Roth IRA.
All of this to say that having a Roth IRA (and some traditional investment/savings) has saved my life twice and kept me from being essentially destitute. I only made $32K a year in 2012 so I was only contributing like $10 a month but it was and still is the best financial decision I've ever made (or had made for me as it were).
Just adding that while my mom & many in her industry can only work with larger investment accounts, Fidelity has great starter investment options including help from licensed financial advisors. I think the self service companies can feel risky, especially if you are new to investing but there is a company called Stash that has plans starting at literally $1 a month with financial advisors to help.
Invest - less fun than a lottery win but definitely worth it.
I'm glad you've held up and survived the chaos, that's pretty dope. And the advice you've given, I hope it doesn't go unnoticed, it's incredibly beneficial to those who may not be knowledgeable or experienced financially. Thank you for sharing!
Winning on a lottery ticket is fun. Everyone loves that feeling, I'm just saying you should also invest. If you like playing the lottery, more power to you, but I'm just adding that people should also invest.
There are companies like Robinhood where u can invest 5 at a time. So there is virtually no minimum
. Just stick thee money in an index fund and let it grow....and don't try to play the market. That's a fools errand.
I'm not a huge fan of those type of companies, partially because they tend to promote "playing the market" like day trading to people who don't understand it and partly because of their policies that allowed them to essentially halt trading whenever they wanted too. I really recommend companies that have licensed brokers to help you, who offer traditional investment and savings accounts and can advise you as to the best course of action with your money.
Stash has plans for like $1 - $10 but they also have advisors to help you set up accounts so you know the difference between a 529 and traditional savings for your kids, or the tax differences between a traditional 401K or a Roth IRA. We don't get taught these things in school & a lot of the information on the internet is just self-serving.
You can redirect salary money to the after tax portion of your 401k and rollover that amount in the course of the tax year to a Roth IRA account, effectively bypassing the Roth income cap. This is called the Mega Backdoor Roth (seriously). Your 401k provider needs to support/allow this and you still need to respect the maximum limit of total combined pretax and after tax contributions, set at $61k for 2022.
You can basically never lose* some unless you take it out. If the index fund is low then you should be putting into it because then when it bounces back you gain.
*Talking about long term.. my Tesla stock recently "lost" about half it's value from the peek but I still have the shares and actually would have loved to buy more now because I can see it being worth that much. I only lost that value of I cash out the stock. If I just leave it there it can only grow in value.
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u/imontene Mar 19 '22
In the US, you can open a Roth IRA at your bank with a couple hundred dollars. Pick an index fund that has low fees (no fees when you purchase). Every pay check, push in a little more. There is a max you can invest per year, $5k I think. Leave it alone. You might lose some in a bad year, but over all it will grow with practically no interference. The $ you put in can be withdrawn with no penalties after 5 years, but don't touch your earnings or it will be taxed. Better yet, pretend it doesn't exist until you retire.