Opening a Roth IRA

I’ll save you the disappointment and before you read on and let you know that I have no advice to give in this post. In fact, it’s the very opposite. I’ve got the expertise in food and am pretty knowledgeable with fitness though I’m no personal trainer… but finances…I enjoy learning and sharing what I learn, but I’ll admit I know the least in this area. It frustrates me when I don’t understand something and I turn into a four year old that just wants to play instead of confronting the problem. Unfortunately, this problem has to do with our retirement, so I actually have to learn something and make an informed decision.

Dave and I met with one of Dave Ramsey’s Endorsed Local Providers (ELP) a few weeks ago to discuss opening a Roth IRA. I was hoping to hear “This is easy; just pick A, B, or C.” While our ELP was very helpful and patient, he posed a lot of questions for us to think about that left me more lost than before we started.

When do you plan to get a house?
How do you plan to pay for your house?
When do you plan to have kids?
Will you be opening a 529 plan for your kids?
Will you be bumped to the next tax bracket tier if you max out your Roth IRAs?
What type of funds would you like to invest in?
How aggressive do you want to be with investing?
With all that said, how much do you plan to invest each month/year?

Ahhh I knew the answer to NONE of the questions! We’d like to max out 2 Roth IRAs but we also want to get out of our apartment sometime soon and would need to save up for a home. This is like a sudoku puzzle with all the factors involved. Do you ever wish that someone would just give you the answers? I’d like to get started on investing since we finished off our 6-month emergency fund in May. I’m hoping we’ll have things figured out by the end of the month. In the meantime, I’d love to hear tips!

Do you have a Roth IRA? What factors did you consider when deciding how much to invest?

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Author: budgetforhealth

Jessica is a Registered Dietitian and shares practical, useful tips on food, fitness and finance. Be sure to subscribe to her blog, Budget for Health!

6 thoughts on “Opening a Roth IRA”

  1. I have a Roth IRA and I max it out every year. It’s a very flexible set-up, meaning that you can take out your contributions (not earnings) whenever you want without penalty. But that does mean that your money won’t be in the Roth IRA growing tax-free.

    If you are unsure how to divide Roth IRA money vs. down payment savings, I would save money in a Roth IRA but keep those funds in a money market / cash fund instead. That way you won’t lose any money, and you buy yourself some more time to think. And if you decide you don’t want to take the money out of Roth, you can move your investments into more stocks/bonds.

    I was really overwhelmed when I first looked into Roths. So I just opened up a Target Retirement fund with Vanguard – and all the asset allocation is done for you within the fund. I think their minimum is $3,000. Six years later, I am still a very happy Vanguard customer.
    Well Heeled Blog recently posted..Is Travel The New Way to “Keep Up With The Jonses”?

    1. Thanks for the advice, I appreciate all the tips I can get. That’s great you just took a step to set up a fund instead of waiting around. I don’t think I’ll ever know as much as I’d like to, but at least I’ll have a good idea of what I’m looking for and what to do.

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