roth ira

Now you need a ROTH IRA account. It’s one of many different tax beneficial retirement account types. You can put up to $7,000 a year towards your ROTH IRA account and you only pay tax on it before. So if you put $6,000 a year, you pay $1,800 a year in taxes for it. But when you take the money out when you retire, all the compounded interest on that money is tax free! POG.

numbers for this is assuming you start maxing out your roth ira at 25yrs old and retire at 65

Keep in mind that you can only have a ROTH IRA account if you make less than $146,000 a year so it’s important to get started on it early in your career when you are making less money. i use M1 for my roth ira. Their interface is really nice. Setup is kinda complicated so I can walk you through it but once you understand how the interface works, it’s really easy.

more on m1 here:

M1

• edit: i wrote this like a year+ ago and since then M1 has added a $3 monthly fee to use their services. the fee is waived if you have at least $10,000 in your account.

401k

the way these work is the money you put into it is pre-tax, so even before uncle sam takes his cut. this way you can always put the “most” amount of money you can. however, he eventually takes his cut when it’s time for you take the money out.

my employer matches up to 5% of my salary every pay period.

$$ (5\% \times \text{Annual Salary}) \div 24 $$

where it is matched dollar for dollar. that’s 100% return on investment. all this to say, if your company offers 401k matching, DO IT.

if your company doesn’t offer a match, prioritize putting money into your roth ira. once you hit the contribution limit, then you can start putting into your 401k. you can also get sexy with the math and put money into both simultaneously