Today’s financial literacy lesson is about a ROTH IRA. I will touch on the basics of what a ROTH IRA is, benefits and resources to help you make the best decision for your future.
What is a roth ira?
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. This is a specialized retirement account where you can contribute after-tax income.
Benefits of a roth ira
- Your contributions and the earnings on those contributions can grow tax-free and be withdrawn tax-free after the age 59½ assuming the account has been open for at least 5 years
- You can withdraw your Roth contributions at anytime penalty free
- Your savings grow TAX-FREE
- You can diversify your IRA using asset allocation
Asset allocation
Putting your money into your ira is just the first step! Next, you will have to set up how your money is being invested and where!
Where can you allocate your money in your IRA?
- Exchange-traded funds (ETF’s)
- Index funds
- Mutual funds
Investing in these funds are the safest and most efficient way to grow your Roth IRA (will create a post on these funds soon!)
Resources
I’m a big believer in doing your own research!! Under every post I will always add different websites and video links, so that you have the tools available to make the best decision for yourself.
https://www.nerdwallet.com/article/investing/how-to-invest-ira
https://www.nerdwallet.com/article/investing/roth-ira-pros-and-cons
HAIRSTON HUSTLE 