What is an appropriate age to open a Roth IRA?
As soon as you have earned income, you can start a Roth IRA. Indeed, some people believe that starting a Roth IRA when you’re younger and paying less in taxes makes sense. Because contributions are made with after-tax dollars, it may make sense to pay your taxes at a reduced rate today and then take advantage of the tax-free investment growth in your Roth IRA account.
Minors can even open a Roth IRA account. In fact, when my kid was younger, I started a Roth IRA for him so he could start contributing right away. Consider starting a custodial Roth IRA on behalf of a child who is earning money through a summer job or other methods.
Is it possible to lose money with a Roth IRA?
Because a Roth IRA is a retirement investment account, your money could be lost. However, it’s also worth noting that assets can acquire value over time. You may be able to decrease your exposure to market volatility by investing in an index mutual fund or exchange-traded fund that is broadly diversified throughout the market.
The bottom line
If you’re just starting out with investing, a tax-advantaged retirement fund can help you grow your money more efficiently over time. You can open a Roth IRA after learning how to start one and benefit from the chance to increase your savings for retirement.
However, there are some restrictions with a Roth IRA, so it’s vital to double-check your eligibility before proceeding. If you do not fulfill the Roth IRA eligibility requirements, you may be eligible to open a traditional IRA or another type of retirement account. If you are unsure which choice is best for you, consult with a financial planner to determine what makes the most sense for your situation.
