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First steps to being THE Rich Grandma – Roth IRAs
- Adithi Volunteers
- Mar 23
- 2 min read
Updated: Mar 23
Most people around you probably tell you it’s important to create an emergency fund and budget your money. However, one crucial aspect of money is investing and making that money grow (in a safe and legal manner).
Roth IRAs are a type of individual retirement account (IRA). The money you put into the account not only grows but can be taken out, tax-free when the requirements are met. TAX-FREE!!! Roth IRA’s are only seen as a “storage” place for your money, so you need to actually invest the money. You don’t want to just leave it in there because nothing will happen 😥. In general, you want to diversify (spread around) your money, and some safe options include stock index funds, bond index funds, and international index funds.
The money you put into a Roth IRA is NOT tax-free or tax-deductible. The money you can invest into a Roth IRA is whatever money you have left after tax. Also, you cannot invest in a Roth IRA if you make too much money. The limit changes each year due to inflation but in 2025, you cannot invest in a Roth IRA directly if you are single and make more than 165k OR if you are married and make more than 246k. Since this account is for retirement the money can only be taken out IF you are at least 59½ years old and have had the account opened for five years.
Follow these tips to get started:
Open up a Roth IRA, it could be online, through a bank, through a broker, or a credit union
Online options: Fidelity, Vanguard, Charles Schwab
Put money into the account – can invest throughout the year OR invest a big sum at once
Invest the money into index funds, bonds, stocks, etc. of your choosing
Sit back and watch the money grow
You may be wondering why you should start contributing now. Retirement is most likely years away and maybe you would rather save up. The answer lies in compounding interest. It can get complicated, so in short, as you add more money, the interest works in your favor and also adds more money to your account. Another post on this later…
Stay tuned for the next post talking about the infamous 401k :)
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