A Roth IRA, also known as Roth Individual Retirement Account, is an investment product that is said to be very powerful and comes equipped with tax advantages. The primary benefit of the Roth IRA is the fact that individuals who take this type of investment product out have the ability to grow and withdraw their money without any tax implications. Funds that are in a Roth IRA are generally used to invest in a variety of funds, securities, etc.
Do I Qualify for a Roth IRA?
Before you can get a Roth IRA, like everything else, you must first qualify for the investment product. Thankfully, for those interested, it is pretty easy to qualify. In fact, most individuals that wish to open a Roth Individual Retirement Account will meet the requirements. The primary qualification that is required of an individual seeking to open a Roth IRA is that the contributions placed in the Roth IRA are from earned income. In addition, you must not make over a certain amount of income annually.
Where to Get a Roth IRA
Probably the most difficult decision to make related to the Roth IRA is where to actually open the Roth IRA. Most financial institutions will offer a variety of IRA’s including the Roth IRA. Just as with bank accounts, credit cards and other investment products, each institution has their own advantages and disadvantages. You will want to find a Roth IRA company that suits your individual needs. Here are a few questions to ask the financial institution when searching for a location to open a Roth IRA:
– What is the minimal investment initially, if any? What about future contributions, if any?
– Are automatic contributions offered?
– What, if any, are the fees associated with the Roth IRA?
– What options are available for investment? Such as real estate, mutual funds and stocks?
– How reliable is the company?
– How long has the organization been in business?
– How many previous customers have been satisfied with the service and product received?
If you have an investment advisor, then you want to speak to him and ask his recommendations for reputable companies. This will save time and could even include institutions you would have otherwise not known existed, but are obviously wise choices.
Before You Actually Invest in a Roth IRA
While it is important for any individual to begin saving for their retirement as early as possible, it is also important to consider a wide array of personal finance issues. Prior to opening a Roth IRA, you should pay off all of your credit card debt. If you don’t want to pay it off complete, you should at the very least may a significant dent in the amount of debt that you have. Secondly, you should take around $1,000 or so and tuck it away for emergency use. You never know when something might come up and you need extra funds.