Roth IRAs are amazing for investing for retirement, but many people make mistakes with these accounts. In this video I cover the most common Roth IRA mistakes I’ve seen.
I recommend these companies for opening a Roth IRA:
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➝ Vanguard:
➝ Fidelity:
Mistakes to avoid:
1. Not using a Roth IRA because you already have a 401k.
2. Not actually investing the money.
3. Not maxing out your account for the year.
4. Not contributing for both people if you are married.
5. Taking too much risk with investments.
6. Not considering your tax brackets.
7. Breaking the rules on contributions.
8. Investing before you paid off high interest debt like credit cards.
9. Not keeping your beneficiaries updated.
Want more Roth IRA info? Watch more of my Roth IRA 101 videos:
Roth IRA rules found here:
Roth Savings Challenge plans for weekly and biweekly contributions:
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**The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time. I am not a professional and this channel is for entertainment purposes only. Do your own research!!
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LEARN MORE ABOUT: IRA Accounts
INVESTING IN A GOLD IRA: Gold IRA Account
INVESTING IN A SILVER IRA: Silver IRA Account
REVEALED: Best Gold Backed IRA
Saving for retirement is an important part of your financial planning. If you have a Roth IRA, there are a few mistakes you could be making that are costing you money. Avoid these nine Roth IRA mistakes to maximize your investment:
1. Not contributing enough
The biggest mistake people make with their Roth IRA is not contributing enough. The current maximum annual contribution is $6,000 (or $7,000 if you’re age 50 or older). It’s important to contribute as much as possible every year to take advantage of the tax-free growth and income the account provides.
2. Not starting early enough
The earlier you start saving for retirement, the more time your Roth IRA has to grow. Waiting too long to start investing in your Roth IRA can result in a lower return on investment.
3. Investing too conservatively or too aggressively
Investing too conservatively can result in slower gains, while being too aggressive can lead to bigger losses. It’s important to find a balance that suits your risk tolerance and investment goals.
4. Not diversifying your investments
Putting all your eggs in one basket can be risky. Diversify your investments across different asset classes to minimize your risk.
5. Not monitoring performance
Monitor your Roth IRA’s performance regularly to make sure you’re on track to meet your investment goals.
6. Not taking advantage of catch-up contributions
If you’re over age 50, you can contribute an additional $1,000 per year. Taking advantage of this catch-up contribution can help boost your retirement savings.
7. Withdrawing contributions early
While you can withdraw contributions penalty-free at any time, withdrawing too early can impact the growth potential of your Roth IRA.
8. Not naming a beneficiary
If you don’t designate a beneficiary, your Roth IRA will be subject to probate and your heirs may not receive the full value of your investment.
9. Not converting your traditional IRA to a Roth IRA
Converting your traditional IRA to a Roth IRA can provide tax-free growth and withdrawals in retirement. Failing to convert may result in unnecessary taxes and fees.
In conclusion, avoiding these nine mistakes is crucial in maximizing your Roth IRA investment. Start early, contribute as much as possible, diversify your investments, monitor your performance regularly, and educate yourself to make informed decisions. Your future self will thank you.
Watch more of my Roth IRA 101 videos: https://www.youtube.com/playlist?list=PLhf4jGRzee7eo2gBLMxqAVJqlO7g5V1NS
Mistakes to avoid:
1. Not using a Roth IRA because you already have a 401k.
2. Not actually investing the money.
3. Not maxing out your account for the year.
4. Not contributing for both people if you are married.
5. Taking too much risk with investments.
6. Not considering your tax brackets.
7. Breaking the rules on contributions.
8. Investing before you paid off high interest debt like credit cards.
9. Not keeping your beneficiaries updated.
Can I still invest while having a car note?
I believe an IRA is not met for risk, I completely agree with you. Keep it as low risk as you can.
If you want risk just do a regular investment account and buy individual stocks, crypto (if you are into that supply demand B.S) etc. Also, IRS does not limit individual stock purchases, usually the broker will impose trade limits for low level cash accounts.
They make it soun like it's a handout. I paid my whol damn life into it. And these idiots thi g everyone should be able to set aside money for retirement but realistically some can't and some won't and I rather they are required to pay I to system. Otherwise they will be penniless come old age and then what? Are we going to have tons of elderly begging on the streets? We would pay "welfare " to them, so bigger tax outlays for us middle income folks. So short-sighted.
Thank you for the information. I believe my question is on mistake #6, I want to make sure what you meant with it, if in the future I surpass the eligible income what would happen with my account? Also if I’m investing on the Roth could I surpass at some point that allowed amount because earning with the investments and then the same not being able to contribute anymore or how does it work? And one more question, I haven’t filed yet yo the IRS for 2022, I’m going to ask for an extension and I know the deadline to contribute to the Roth is April 18, so can I still contribute or do I need to file first? THANKS
Omg thank youuu! You explained this so well. I have been tripped up trying to decide what type of Roth IRA to get and you nailed it on the head. I wasn’t aware that we could have two separate IRA’s despite being a one income household. Just awesome. My son has special needs so I worry about his future, and this is great to know.
Thank you! I had no idea we can add more money than the limit onto the ROTH even if it’s not permitted an easy mistake to make and get in trouble. I would think the roth companies would cap you once you maxed out!
I appreciate the info! ❤