This is a post I've thought a lot about since my last semester of grad school, but I've just never gotten it written out. A few weeks ago I found out about the Roth IRA Movement that Jeff Rose (husband of my blog friend Mandy) is doing and I thought this would be the perfect opportunity.
As I sat in my SIXTH year of business classes, in what had to be at least my twelfth finance class, I learned about how important Roth IRA's are for the first time. I was immediately in awe and frustrated. Frustrated because I felt I had wasted so many important years of investing, and in awe that so many people really know nothing about the greatness that is the Roth IRA.
So, I was going to show you the illustration that my professor gave us, but I cannot find my notebook from my class, and Jeff already typed up a better diagram anyway.
So, as you can see, Roth IRAs are awesome because the timing is the most important factor...not the amount you actually invest. Another cool thing about Roth IRAs is that they are non-taxable in the United States.
The most important thing I'd like to point out about Roth IRAs is this- there is no time like the present to start investing. I know that when most kids are in high school or college retirement seems so far off that it's hard to fathom the importance of early investments. I also know a good portion of my friends who are just graduating college would say that they can't afford to invest because they have student loans or they are just starting their career and will make more money in the future. Yada yada, blah, blah, blah. I will tell you this. Nathan and I have been married seven years. We have had good times and bad times financially. It hasn't just gotten easier and easier as time goes on. For a long time I thought that if we could just make it through college we'd have more money, but now I laugh at my former self. Kids cost money. Houses cost money. Cars, vacations, dental work etc. all cost money. It's up to you to decide to prioritize retirement saving and for us, it is a priority. Doesn't it break your heart when you see an elderly man working at the grocery store stocking shelves or pushing carts? It breaks mine. I don't want that to be my husband, and I don't want that to be me. That's why I'm investing in a Roth IRA.
For more information on Roth IRAs please visit Jeff's blog Good Financial Cents.