You are never too young for an IRA and the earlier you start preparing for retirement, the better it is for your financial freedom. Investing for retirement should never be put in the backburner till you turn 25 or 30 or settle down with a permanent job. IRAs are a great option to start investing your money as they are really easy to open and operate while requiring small investment only.
There’s no point fence-sitting till everything falls into perfect alignment because even a $400 dollar annual contribution towards your IRA account is enough to start with. Young investors focused on long term gains have numerous choices in front of them but the most preferred among them is Roth IRA.
Roth IRA – Perfect choice for young investors
Roth IRA makes perfect sense for young investors as it is one of the most straightforward investments that anyone can think of. You will be taxed on the money you contribute towards your Roth IRA and as long as you adhere to the guidelines, you will never be taxed on your withdrawals after you retire. Younger individuals can benefit for Roths by investing on the businesses that offer long term gains through capitalization on the market’s movement. Leveraging the market to make good gains while not having to pay any tax on withdrawals is simply awesome.
3 Stellar Advantages offered by Roth IRA
It is really simple to avail tax free withdrawals after retirement instead of just calculating what you will need after the taxes and sending off the estimated payments to IRS.
- Easy Withdrawal
You will be able to withdraw your contributions at any time from your Roth without paying any penalty. Even the early-withdrawal penalty of 10% can be avoided if you are buying a home for the first time or you are disabled. This benefit is available in case of deaths as well.
- Lower Tax Rates
The federal income tax rates are extremely low. Your present tax might be higher than what you will be paying at 59 ½, so that’s a much easier option.
The maximum permissible limit of investing in a Roth is $5500 every year and for people above the age of 60 can deposit $6000. You can walk into your nearest bank any day of the week and open your IRA certificate of deposit. The primary aim of IRA is to encourage investment, so invest whatever you can, even when you are in your early 20s.