What if I told you that you could become a millionaire by taking this one piece of advice. And worst case scenario, you become a $500,000 aire.. I think that makes sense. Hey friends. It’s Jarrad from Debt, Free Blueprint. we’re gonna be talking about what a Roth IRA is, why you need one and how it’s possible to become a millionaire by investing in one.. This is probably gonna.. So Hulk smash that thumbs up button. So we can make sure that other people know about this.
. I so wish that someone would have given me this advice when I was younger, but they didn’t.. So, that’s why I wanna make sure that you know the in’s and out’s of this whole thing., So that you can become a millionaire a lot easier than me. Leave. A comment down below letting me know your thoughts on investing in a Roth IRA.. just like this, one then hit that subscribe button and the notification bell so YouTube knows to deliver them to you.. There’s also links to playlists in the description. just like this one. Starting in 2019, the max amount of money that you are able to invest in your Roth IRA is $6000 per year. Or $500 per month.. So if you’re married and you each earn an income, then each of your can invest up to $6000 starting this year.. The sooner you invest in a Roth IRA, the better.. I highly recommend setting up an account and funding it as soon as possible for one main reason. And that’s time. Time invested is so important. The longer your money is in the market. The more time your money has to grow through compound interest.. Just so, you know how important time is, let’s say, person A B, C and D, all invest $1000 each. And didn’t invest anymore money between now and the age of 60.. The only difference between any of them is their age and the amount of time that they had their money. Invested. Person A is 20 years old.. So after 40 years, his $1000 investment is worth almost $15,000.. Now, let’s move down to person D. They are 50 years old.. So after 10 years, their money has the potential to only be worth a little less than $2000.. They all had the same return and they invested the exact same amount.. But the person who had been invested in the market for 40 years, as opposed to 10 years, has almost eight times the amount.. I know it’s absolutely insane., So please take a minute to pick your jaw up off the ground.. Once again, the only difference is the amount of time that their money is sitting in the market, taking advantage of compound interest and reinvesting their dividends.
. When you hear the word Roth, that basically means after tax money.. That’s the money that you actually receive in your bank account from your employer after they’ve, taken out all of the taxes that you owe. Now IRA stands for Individual Retirement Account., It’s another retirement investment account that you can invest in outside of your retirement accounts. Like a 401k or 403b. Put those two words together and you have yourself a Roth IRA., A retirement account that you can invest it with after tax money only.. The nice thing about an IRA in general is that the majority of people are able to invest in one.. The downside is that it’s self-directed., So most people don’t even think about investing in one because they either didn’t even think about it or they’re too worried, because they don’t know how to do it. Hit that subscribe button. You out with this sort of thing. One easy mistake that a lot of people make when thinking through what a Roth IRA is is that they think that they just need to invest in a Roth IRA and that they’re completely done.. But an IRA isn’t an actual investment. Think of it like a bucket.. Within that bucket, you could have all kinds of different investments.. You could own shares of individual stocks like Amazon, Apple Tesla.. You could own different low cost index funds, bonds or even Reits. Within this IRA bucket. You could also trade in and out of these stocks and funds without paying capital gains.. So when we’re talking about a Roth IRA, we’re talking about the actual bucket itself., Not necessarily what type of investments you’re putting into that bucket. I’ll give you an idea of some of my IRA… An amazing thing about the Roth IRA is that, because you are investing with money that has already been taxed today, your money will be able to grow and with be withdrawn, tax free once you hit the age of 59 1/2.. This is a huge deal.. So if you invested $166 per month into your Roth IRA every month for 30 years straight, and you assumed a 7% return on your money, then starting at the age of 59 1/2, you could withdraw that $188,000 and pay zero taxes on that money.. Yes, you have that right.. That means that you could have that money deposited into your bank account and you could walk right up to the counter and withdraw all of that money at once.. You’D actually have to call ahead to make sure that they have that money. On hand for you. One time I tried to withdraw $3000 in $1 bills.
And I had to order the money ahead of time, so they had it ready.. Yes, they thought I was going to a strip club., But that was not my plan.. I promise.. Since this is a retirement account with money, that’s supposed to be used once you hit 59 1/2. If you try to withdraw that money before that age, then you’ll be charged high penalties., But there’s a catch.. When you hear that you can’t withdraw your money until 59. 1/2, without paying penalties, you may freak out., But I want you to hold on for a minute., Because there is a little bit of a loop hole for you to know. About.. You can actually withdraw the money. You contributed to your Roth IRA before 59 1/2 without paying any kind of penalties.. As long as you don’t withdraw any of the gains from the account then you’re good to go.. So if you invest $3000 into your Roth IRA this year – and you have gains from your investments that increase your total investment to $3500, then you can withdraw $3000 at any point in time without paying any penalties.. Now, if you withdraw the whole $3500, then you would be paying penalties and taxes on that $500. Gain that you made. Technically, you could treat your Roth IRA, like a mini savings, account since you’re able to withdraw the contributions tax free.. But I highly highly recommend not looking at it like this at all.. If you do anything to remove any of the money from your Roth IRA account, even if it’s only your contributions like we just talked about, then you’re losing out on the benefits of time in the market., And we already know how important maximizing that time can be. For you. Just pretend in your head, like all of this money, you cannot touch until you are 59. 1/2.. It’s a gift to help your future self out. So you don’t have to work until the day that you die. Keep your emergency fund savings separate in a place like a high yield online savings account and leave this IRA alone. If you possibly can., You can invest money into your Roth IRA at any point. In time throughout the year. – And you can do this through small or large increments – as long as they total less than $6000., For example, you could invest all $6000 on January 1st.. You could invest $500 per month throughout the year. Or you could invest all $6000 throughout the first six months of the year.. Then not worry about it again until you invest into your Roth IRA again, the next year. There’s another loop hole, though., There’s something called a catch up contribution when it comes to your Roth, IRA.
Say it’s January, 1st 2019 and you realize that you forgot to deposit Any money into your IRA in 2018., Or you were waiting to receive some sort of a bonus on the first of the year.. What catch up contributions? Allow you to do is invest towards the previous year’s IRA limit, which in 2018 was $5000 up until tax time of the current year.. So you would have up until April 15th of 2019 to invest up to $5500 towards your 2018 IRA., And you could still invest up to $6000 for your 2019 IRA.. I actually took advantage of this catch up contribution. Once I had my debts paid off and started investing more money into my IRA., It was extremely helpful for me, since I wanted to start building wealth as soon as possible.. Anyone with taxable income is able to invest in a Roth IRA as long as you earn. Some sort of income., If you are younger than the age of 18 or know someone who is younger than 18, then they’re able to contribute to a Roth IRA as well., But they just need their parents to help them open an account.. As long as that person is earning some sort of income, then they’re good to go.. If you know someone under the age of 18, then please, please, please help them out with opening an account.. You will literally change their life.. You wanna know how much you could change your life.. If you get a 16 year old to start investing $1000 per year into a Roth IRA which comes out to about $83 per month, then when they hit the age of 60, they could have over $265,000 in their Roth IRA.. You would be the coolest person they’d ever meet., Don’t worry folks. My battery died. We’re good to go.. Ideally they’d be investing more than that as they got older., So they would actually become a multi millionaire and be set financially a lot sooner for a lot. Longer. Back to you thought., You are eligible to invest the full $6000 into your Roth as long as your income is less than $193,000. If you are married filing jointly. And less than $122,000, if you are single or married filing separately., There’s all kinds of companies out there to open an IRA with. Places like Fidelity, Charles Schwab, Vanguard, Betterment and M1 finance.. Remember that the IRA is just a bucket that you put your different investments, into.. Think of these companies as who is holding that bucket for you.. You can actually have multiple companies hold IRA buckets for you at once, Which platform you choose to invest through is all going to depend on your initial level of knowledge.
I personally invest my IRA through Vanguard and have started to use Betterment and M1 finance as well They’re simple, and I like their investment options I have the majority of my IRA investments in low cost stock market total stock market index funds like VTSAX and VTI, for lots of different reasons Let me know in the comments down below, if you want me to get into more detail when it comes to this sort of thing This year, I’ll be splitting my $6000 IRA Investment between Vanguard, Betterment and I’ll be using M1 finance as well If you’re interested in any of those investment platforms and I’ll throw links in the description for you So, are you ready to find out how you can can become a millionaire or even a $500,000 aire by investing in your Roth IRA? This goes back to how important time is when it comes to being invested If you max out your IRA for 40 years and assume a 7% return, which is a very safe assumption, you will have invested $240,000 of your own money, But your Roth IRA investment could be worth almost $12 million of tax free money If you do the same thing for 30 years, you’d have invested $180,000 of your own tax free money, and your IRA account has the potential to be worth over $566,000 Over half a million dollars of tax free money for you to take out and spend On who knows, what, Please open a Roth IRA and start funding it today with as much as you possibly can up to the max I max out my Roth IRA every single year, because I know how important it is to my financial future Do it, even if you can only invest a few hundred or a few thousand dollars this year? It doesn’t matter where you go to open an account, Just make sure that you are paying attention to the fees that are involved with, whichever investment that you choose to go into That Roth IRA bucket for yourself Ask me any investment questions that you have down below – Make sure to smash that thumbs up button And pick up your free copy of the Debt Free Prep workbook so that we can start getting you to a point where you are financially free I’Ll, see you in the next one friends Adios