Author Topic: Is it in my best interest to set up a Roth IRA?  (Read 230 times)

vinnybagodonuts

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Is it in my best interest to set up a Roth IRA?
« on: June 12, 2019, 10:10:05 AM »
I am 22 years old. Finishing up my first year of working at starting salary. I contribute %20 of my salary to a TDA that gives a fixed rate of 7% interest.

Would it be beneficial for tax deduction purposes, or do you think the TDA I contribute to, along with pension when I retire are enough?

I am also interested in investing in individual stocks and index funds, so at the end of this I probably would only be able to contribute a couple thousand a year to an IRA. Thanks!

MDM

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Re: Is it in my best interest to set up a Roth IRA?
« Reply #1 on: June 12, 2019, 10:20:55 AM »
I am also interested in investing in individual stocks and index funds, so at the end of this I probably would only be able to contribute a couple thousand a year to an IRA.
Good for you for starting early!

Based on the quoted line, your might benefit from a little more self-study.  E.g., see the 'Basic Terms' tab of the case study spreadsheet, and perhaps the Investment Order.

After reading those, come back with whatever questions are still unresolved - or new ones. ;)

Good luck!

nereo

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Re: Is it in my best interest to set up a Roth IRA?
« Reply #2 on: June 12, 2019, 10:22:01 AM »
The investment order addresses many of your questions.

To directly answer your question, an IRA (and particularly a Roth, if your current tax burden is low) allows you a great deal more control than work-sponsored TDAs.  For example, you can take contributions out of a Roth account penalty free at any time, which allows it to double as an emergency fund.  You can also invest in basically whatever you want in an IRA and with any brokerage.

Edit:  See that MDM beat me to it!