No. of Recommendations: 3
Greetings, Eddie, and welcome. You asked:

<<OK, I am new to all of this so pardon the ignorance. I am 17 years old. I have heard of the great powers of compunding in a Roth IRA. What is the minimum age to start one? Also being that the limit is $2000 a year. Can I put in say $150 a month?>>

There is no minimum age in the law. The only requirement is that you have earned compensation (i.e., wages from a job) in the year you make a contribution. Based on that compensation, you may contribute up to $2,000 per year or your actual wages if less. That may be done all at once or throughout the year depending on how your custodian agrees to take the money. You idea of $150 per month would be acceptable to most custodians.

The biggest problem you will encounter is getting a custodian to open an IRA for you because of your age. However, some fund families (I'm told Vanguard is one)will accept a minor's IRA.

I commend you on thinking of an IRA at your age. If you start using one (and for you I suggest a Roth IRA because all proceeds will ultimately come back to you untaxed), then you will never regret it when you finally get to retirement age. All of those years of compounding will allow you to have a small fortune.

As an example, say you just put in $2K into a stock index fund compounding at 11% per year and never again made a deposit. When you reach age 60 in 43 years, that $2,000 would be worth $177,794. In a Roth, none of it would be taxed. And if you deposited $2K each year? You would have $1.6 million. Now that's worth thinking about and acting upon at your age, no? :-)


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