Do you thinking investing for your retirement is confusing? It is. But it does not have to be so daunting you avoid it. You can make it simple. First, take advantage of your employer's retirement program, if they have one. Start there. Next, open a Roth IRA.
But what the hell is a Roth IRA? A Roth (named for the dude who helped create it) IRA (aka Individual Retirement Account) is a retirement savings account that grows TAX FREE! YOU WILL NOT PAY TAXES on your earnings as the money adds up or when you cash it out. You hear that? TAX FREE!
HOW IN THE WORLD IS THAT POSSIBLE? You already paid taxes on this money...but it is only for retirement (must by 59 1/2 before you withdraw).
What do you put your money in? You can invest your hard-earned dinero in mutual funds (I love me some Vanguard funds - www.vanguard.com), stocks, bonds...
But there are some stipulations...
1. You can only contribute up to the maximum each year. Right now, the max is $5,500. If you cannot do the max, do something, anything.
2. There are income restrictions (varies based on single or married) and you must earn an income (cannot open for a child - look into a 529 for your kiddo).
3. You can pull your money out in certain circumstances, but try not to. If you pull out before 59 1/2, you will likely face some fees on the earnings (no penalty for withdrawing contributions). And fees are the worst.
Getting it a bit? What should you do now? Research Roth IRA options at places like Vanguard and Fidelity. And do it now, especially if you are in your 20s because it adds up in the long run! Put the money in and forget about it. Make small contributions monthly - a couple hundred a month (or whatever you can manage) is much easier than one big contribution a year.
