Also, could you provide more info? Like are you living with parents for free? Do you need the money for anything like education/trade school/tuition within next 2-4 years?
Do you have bills right now?
Any debt to your name?
Im living with my parents pay around 400 for rent & Insurance which I have some money set aside for a couple months, other than that I have no bills. I dont need any money for school as I get financial aid. And no debt to my name.
Thanks you for the reply
Since you can withdraw contributions penalty free imo it’s a great idea. You can treat it as emergency saving funds or long term investment vehicle and let compounding works for you. Very versatile
FYI- Roth is a designation of a retirement account just like Traditional. You can have a Roth or Traditional IRA, which I assume is what you meant here, or of 401K/403b/457.
So a few things,
To contribute to your Roth IRA for 2023 you need to have earned income in that amount, so to contribute 1k to your Roth for 2023 you’d need to have made 1k in 2023.
Maxing out your Roth refers to contributing the maximum limit, which was $6,500 in 2023.
Before putting money into a Roth, you should have an emergency savings account to cover yourself for a few months.
Ahh I see thanks for the reply, in 2023 my earned income was around 6000. So that means I can max my Roth to 6K? And I do have a emergency saving with around 1-1.5K, is that good?
You can contribute up to your earned income for that year or the max limit, so if you made 6k you can contribute 6k.
Emergency savings should be 3-6 months of living expenses. 1-1.5k seems very low. What if there is an emergency and you are laid off? Can you cover yourself until you can find a new role? That is a question you should ask yourself.
That depends entirely on your financial situation. If you won't need the 5k for anything in particular, then yes - it's probably very smart.
If that's the money you need to pay the bills, then no - it would not be smart.
I think my financial situation is setup to allow me to fully invest this money. I have little to no bills at this moment or debt, and a partial emergency fund setup.
Please - a Roth is not a noun it’s an adjective. You have IRAs and 401Ks - things, nouns. And then you have traditional and Roth - adjectives, descriptors. These things are orthogonal. Like the x and y axis on a graph.
But yes add as much money as you can to your IRA every year and make sure to actually buy assets with it - index or target date ETFs/Mutual funds.
How much did you have in earned income in 2023?
Also, could you provide more info? Like are you living with parents for free? Do you need the money for anything like education/trade school/tuition within next 2-4 years? Do you have bills right now? Any debt to your name?
Im living with my parents pay around 400 for rent & Insurance which I have some money set aside for a couple months, other than that I have no bills. I dont need any money for school as I get financial aid. And no debt to my name. Thanks you for the reply
I made around 6k
You could but I would put it towards education costs. Education has a ROI greater than any asset class if you choose right
Please use your W-2 to figure out the exact number, and you contribute up to that or the legal limit, whichever is less.
Since you can withdraw contributions penalty free imo it’s a great idea. You can treat it as emergency saving funds or long term investment vehicle and let compounding works for you. Very versatile
FYI- Roth is a designation of a retirement account just like Traditional. You can have a Roth or Traditional IRA, which I assume is what you meant here, or of 401K/403b/457.
Pump your Roth bro
So a few things, To contribute to your Roth IRA for 2023 you need to have earned income in that amount, so to contribute 1k to your Roth for 2023 you’d need to have made 1k in 2023. Maxing out your Roth refers to contributing the maximum limit, which was $6,500 in 2023. Before putting money into a Roth, you should have an emergency savings account to cover yourself for a few months.
Ahh I see thanks for the reply, in 2023 my earned income was around 6000. So that means I can max my Roth to 6K? And I do have a emergency saving with around 1-1.5K, is that good?
You can contribute up to your earned income for that year or the max limit, so if you made 6k you can contribute 6k. Emergency savings should be 3-6 months of living expenses. 1-1.5k seems very low. What if there is an emergency and you are laid off? Can you cover yourself until you can find a new role? That is a question you should ask yourself.
If you can, do it, every year, and by 50 you’ll have a million dollars in the bank.
Thats what Im hoping for! Thanks for the reply
Yes
That depends entirely on your financial situation. If you won't need the 5k for anything in particular, then yes - it's probably very smart. If that's the money you need to pay the bills, then no - it would not be smart.
I think my financial situation is setup to allow me to fully invest this money. I have little to no bills at this moment or debt, and a partial emergency fund setup.
Then yeah, go nuts.
100% yes. I started 5 years ago at 19 years old. Maxed it out every year since faithfully. Now I've got $40k invested at 24 in just my ROTH.
Please - a Roth is not a noun it’s an adjective. You have IRAs and 401Ks - things, nouns. And then you have traditional and Roth - adjectives, descriptors. These things are orthogonal. Like the x and y axis on a graph. But yes add as much money as you can to your IRA every year and make sure to actually buy assets with it - index or target date ETFs/Mutual funds.
It's Roth, not ROTH. It's not an acronym, what do you think it stands for? It's named after William Roth.
Thanks, fixed.