Roth IRA Simplified

If you haven't setup a retirement fund yet, now is the time. I’m going to give you a step-by-step, and the best part is you barely need any money!

Before we begin, some assumptions:
1) You have a few bucks put away for a rainy day.
2) You have no credit card debt.

If those two conditions aren’t met, work on them before you start.
1) Go to Vanguard.com
2) Select Retirement > Roth IRA
3) Investment Type: Select a Target Retirement Account of the year you think you’ll retire (higher year, higher risk investments – more potential rewards).
4) Enter your bank information, and select $50 a month (or higher if you can afford it) automatic investment plan.
5) Caveat: You need to get to $1,000 before you can stop the automatic investments.

That’s it. Easy as pie… This is usually made out to be ridiculously complex, but it’s simple.

Why Invest With Vanguard?

Vanguard is the best place to invest because it has the lowest utilization fees. Historically, most index funds return an average of about the same (approximately 8% a year) the only real difference is the fees that are charged. Vanguard is the go-to place for low fee investing. Depending on how much and how long you invest, it can make a huge difference.

If you want to see how fees can impact your retirement, check this out: http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/

Why a Roth IRA?

Roth IRA’s are the bomb! First off, you can pull out any money you put in if you have to. They’re tax advantaged & tax deferred – which means when you go to file you usually get a tax credit for saving. And when you eventually retire you don’t have to pay taxes on the withdrawal. Awesome, right!

Why a Target Fund?

Set it and forget it, baby. In the early stages of investing asset allocation means almost nothing. You need to focus on accumulation, once you get something built up worry about how it’s invested.