Build Tax-Free Wealth with a Roth IRA

Are you investing for your retirement? If not, why not? You should definitely start and the best way to do this is by opening a Roth IRA account. In this account, you contribute after-tax dollars and your contributions will grow tax-free. When you are ready to retire at age 59 1/2, you can withdraw your contributions and earnings all tax-free.

Note: A ROTH IRA IS NOT AN INVESTMENT, IT IS THE ACCOUNT THAT HOLDS INVESTMENTS

A Roth IRA is an individual retirement account in which you have the freedom to invest in any stocks or funds you want and withdraw your contributions and earnings at age 59 1/2 without having to pay any taxes. It is a simple process to open a Roth IRA. You have to sign up with a brokerage firm and select Roth IRA when it asks you to select an account type. I have mine with Fidelity. The Roth IRA is not the investment itself, but it is the account that holds the investments. Your investments can be as simple or as complicated as you want them to be. I like to keep my investments in my Roth very simple by just investing in the same fund every month.

What to Invest in Inside your Roth IRA?

It is best to keep your investments simple inside your retirement account. I invest in an index fund that provides diversification across the entire stock market. Every month I make sure that I contribute to FZROX (Fidelity Zero Total Market Index Fund). FZROX is an index fund that invests in over 2,000 stocks of U.S. companies across many sectors and does not charge any fees. I invest by setting up an automatic investment in my Fidelity account. This is a great option for anyone who would like to set it and forget it. On their website, fidelity.com you can select which day of the month you would like to invest as well as the amount. You may also change these settings as you wish.

You can maximize your Roth IRA by contributing the maximum allowed every year. Starting in 2023, the maximum you can contribute per year is $6,500. This comes out to approximately $541 per month. If you cannot afford to meet this maximum, do not get discouraged. It is better to invest only what you can afford to until you are able to invest more. Small amounts will always become large amounts over time.

Disclaimer: none of the stocks or funds mentioned are meant to serve as specific financial advice. I am simply showing what I invest in and sharing my opinions. I am also encouraging further research which can be done at SeekingAlpha.com. All investing involves risk but not investing involves even more risk.