UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev | Next
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75525  
Subject: Re: Starting Roth Ira Date: 7/18/2000 3:33 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
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? :-)

Regards..Pixy



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Macro Economics

U.S. Stable, Europe Stalling
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement