roth ira

In this video, the speaker discusses how to open and start a Roth IRA. They explain that a Roth IRA is a retirement account where you contribute after-tax dollars that grow tax-free and can be withdrawn tax-free. The speaker suggests finding a reputable provider with low fees, diverse investment options, and reliable customer service. They recommend using apps for convenience. Some common providers mentioned are Fidelity, Charles Schwab, JP Morgan, and Robinhood. The speaker also emphasizes the importance of filling out beneficiary information. They show their Fidelity account and explain how to contribute and invest money into a Roth IRA. They mention that simply transferring money to the account is not investing, and one must actively invest the funds. Hey guys, welcome back to the channel. My name is Timothy, and on this channel we speak everything personal finance. When I say everything, I mean everything. In today's video, we are going to be talking about how to open a Roth IRA, how to start a Roth IRA. If you don't have one, if you do have one, you can still learn how to perfect it. I don't know. But if you don't have one, you will be learning today how to start, how to open. If you don't have one, you will learn today how to open a Roth IRA. Before we start, I want to tell you what a Roth IRA is. It is a retirement account where you put after-tax dollars in, and they grow tax-free, and then you take them out tax-free. So, it's for your retirement when you ... So, it's for your retirement, and you're able to take this money out when you're 59 1⁄2 years old, so that is ... So, I want to tell you what a Roth IRA is. It is an account where you contribute after-tax dollars. They grow tax-free, and then you take the money out. So, the money grows tax-free, and then you take the money out tax-free, because you already paid taxes on it, because it's after-tax dollars. So, this is a retirement account that you will be using once you return, that you will be able to pull out tax-free once you're 59 1⁄2 years old. Now, some Roth IRAs are offered by your employer. Those are called a 401k Roth ... Some Roth IRAs are offered by your employer, but a lot of Roth IRAs are ... A lot of Roth IRAs are created from outside companies, which I will talk about in the steps, but I just kind of want to give you a framework of what a Roth IRA is if you don't know what one is. This video is not only for beginners, but it's for people that are investing in Roth, and you can see to make sure that you're doing it right, make sure the money you're putting in is going where you want it to go. So, I'll be giving you five simple steps to open your Roth and get your money growing so you can have a better future for yourself. The first step is to find a provider, and the first step is to choose a provider. There are countless options available for providers you can choose to invest in ... There are countless providers you can choose for a Roth IRA. Providers offer different kind of retirement accounts, not only Roth IRAs, but today we're talking about Roth IRAs. Some things to consider when choosing a provider for your Roth IRA is if they have low ... Some things to look for in a provider that offers Roth IRAs is, is it a reputable company? Is it a company that you heard about? Is it a company that people are talking about? Is it a company that you refer to? A good way to find a provider is ask your parents, who are they investing with? What companies are they investing with, and is it a good company? If you find that a lot of people are investing with, say, Fidelity or Charles Schwab, then those are most likely good companies that you can go with to invest your money. One thing to look for when choosing a provider is that they have low fees, diverse options. One thing to look for when choosing a provider is they have low fees, diverse investment options, and reliable customer service. I also like companies that have good apps, because I'm a big app guy, so I have all my apps on my phone, my bank apps, my investment apps, and the app has to be very fluid and simple and easy for me to understand, for me to go with the provider. I have some bank apps that I don't really like, so I'm not banking with them. I don't bank with them, because I don't like the app, so it makes it difficult to look at things, and just be sure that your provider does have a good app. If you're more of an app person, I'm not really much of a computer person, I like to go to my apps, they're quicker, it's easy to log in, just face scan, and you're in. Be sure to consider those things when searching for a provider. Some providers that are pretty common out here, some providers are JP Morgan, Fidelity. Some providers are JP Morgan, Fidelity, Robinhood, and Charles Schwab, and those are just a few there, but there are many other providers out there that you can go with, and they're all really the same, there's whichever one you support the most, you can just go with. For me personally, I like Fidelity, I like their app, their interface is pretty simple, investing with them is pretty simple, and I found them from just looking where should I open a Roth IRA, and Fidelity was one of the first ones that came up. I looked them up into NerdWallet, NerdWallet is a great site to go to when deciding on where to invest your money, or anything really, I love NerdWallet. They give good reviews on different companies, and Fidelity had great reviews. Once you find your provider, let's say for example we chose Fidelity, we're going to go to their website, we're going to create an account, so you're going to put your normal information in, Chris Newport, you put in your last four digits of your social security number, or your social security, and you just go through the process of creating an account, whatever information they need, you put it in, make sure it is a trusted website, a trusted provider, there are many providers out there that are trusted, so you can't go wrong with Fidelity, and you can't go wrong with Charles Schwab, and those other companies that I listed earlier on in the video. Also be sure to fill out your beneficiary information. If you grow these accounts to multiple commas, multiple zeros, you want to make sure this money goes somewhere good. You want to make sure this money can go to someone, if anything were to happen to you, so you do want to make sure you have beneficiaries, whether it's your mother, your father, your sister, your wife, your kids, be sure to have a beneficiary, because if something did happen to you, I'm not sure if you would want this. I would think you would want this money to go to that person that you hold dear inside your heart. Most applications can be completed online, everything is really online now, it's easy to fill out, just fill out your information, and you should have an account, and then we are going to go to my computer, where I have my account open, with all my numbers, they're not crazy, I just started my Fidelity in 2023, so I personally just learned, I didn't just learn about it, I personally just learned about how to open a Roth IRA, and why you should open a Roth IRA, because I was just doing it for an okay, but I have extra income I can put into a Roth, so I'm going to the computer now, so I can show you what my Roth IRA looks like, and how you can start going, and how you can go to step three, and how you can move on to step three by opening an investment. How you can move on to step three by picking your investments. How you can move on to step three by picking your investments. How you can move on to step three by picking your investments. How you can move on to step three by picking your investments. Alright guys, so here we are on my Fidelity account, this is what your dashboard will look like, when you create your account, as you open it, this is what it would look like, of course yours would say zero, I want you to ignore this number, and this number, also ignore the 529 that we haven't started yet, and ignore the individual, this is a brokerage account. Here's my Roth IRA, let's just click it, and it opens your Roth IRA, and here you can see your IRA contributions, and how much you can contribute a month, which now is $7,000 if you're under 50, and $8,000 if you're over 50. Which is now $7,000 if you're under 50, and $8,000 if you're over 50. So you see I'm under 50, so I can contribute up to $7,000, and so far this year, in 2024, I've contributed $1,545. And when I say contributed, that's not my investments, that's money coming out of my account. So contributed is the money that comes straight from your account, so say you contribute $300 a month, that's $300 coming from your checking account to your Roth IRA. So if you calculate that would be $3,600 that you would be contributing a month. So far I've contributed $1,545, and you can see my balance is at $3,101.12. And this shows the gain, I've gained $37 today, this Saturday, so the mark is not up. And I've gained $37 today, or whatever, whenever this was last open, and you can see the past year I've gained 23%, which is a good number, it's a great number when the average gain of say the S&P 500, which is an investment account, which is something that you can invest in, it's average gain is about 7-8%, so it was a really good year. Last year, this year so far is not so great, year to date is at 6%. And you see here asset allocation, that most of my portfolio for my Roth is in stocks. But, now that we have gotten acclimated with the Roth IRA page on Fidelity, I'm going to tell you step 3, which is how to actually invest your money. So what you want to do is go to transfer. Once you're in transfer you're going to add your bank account information here, I already have mine activated, Capital One, so what you do is add your bank information, which is you can add your bank right here, right here at the bottom, you can add your bank, mine is already there, so I have this account right here, Capital One, I'll click that, so I'll move Capital One money from my bank to my Roth IRA. Transfer to Roth IRA, it's very simple, very easy, it's not difficult to do, but there is one caveat here. Now people assume when you transfer, now I know I've heard and read some things where people assume that just because you transfer money from your bank account to your Roth IRA, that's investing, it's not. So your Roth IRA is like a bank account in itself where it just holds money, until you put that money to work, that money will just be held there, it doesn't gain interest, it doesn't lose interest, it's just sitting there, so you have to actually invest that money. So what we're going to do here is we're going to invest, for an example because I'm already on a recurring monthly, I'm on a recurring monthly transfer, which I'll show you guys how to make a monthly, which I'll show you guys how to do that by making a monthly, which I will show you guys how to make monthly transfers to your account automatically. I would transfer $3, okay, you transfer as much as you want, one time, thank you, submit. So now $3 is getting transferred from my account to my Fidelity account, and you can put as much money as you want up to $7,000 for the year. Money arrives, see your estimated transfer, okay, and you just go and invest your Roth IRA or exit portfolio, alright, we're back at portfolio, so we're going to click trade. Now this is when you pick your investment types, there are many investment types, and I'm not here to tell you which one you should pick, what you should do, how you should invest your money, me personally, I invest into the S&P 500, which is a collection of the top 500 companies in the US, and they kind of just, let me see, hey Siri, let me see, so I personally invest into the S&P 500, which is a collection of the top 500 companies in the US, which, you know, it's not always the same company because it's always changing, and it's about the average growth, and it grows at the average of about 7 to 8%, even 10%, so a low of 7, I would say an average, the median is about 7 to, is about 10%, so that's pretty good growth, the 10%, I mean imagine what a high yield savings account, a high yield savings account grows at 4 to 5%, so you can put your money in the stocks, or into the S&P 500, it's going to grow at 10%, which is a pretty good growth, and it's about the average growth, and it grows at the average of about 7 to 8%, even 10%, so a low of 7, I would say an average, the median is about 7 to, is about 10%, so that's pretty good growth, the 10%, I mean imagine what a high yield savings account, a high yield savings account grows at 4 to 5%, so you can put your money in the stocks, or into the S&P 500, it's going to grow at 10%, which is double, right, so that's a good number, so what you do here is click mutual funds, because S&P 500 is mutual funds, Roth IRA, and I would do S&P, so Fidelity's S&P 500, at least how I understand it is Fidelity 500, is FX, oh it's index funds, so I invest in index funds, so I invest in index funds, and one of the index funds I invest in is FXAIX, which is Fidelity's index fund, I don't do Vanguard, like I said, I like Fidelity, it's simple, it's easy, I tried Vanguard a while, a long time ago, I should have actually started investing a long time ago, but I just didn't understand the website, it was confusing, I was young, I was dumb, I didn't know what was going on, but I understand Fidelity, so I choose FXAIX, and like I said, I am not here to tell you where to invest, maybe I'll do a video on good investments that you can put, on good things to invest in with your Roth IRA money, but this is not that video, this is kind of a general how to invest your money, so I recommend FXAIX, which grows at about 10%, it's a good percentage, so you click that, you see I have cash available, $3, because I put $3 in there, and then I will click buy, because you want to buy the Fidelity 500 index fund, and you're going to put $3, and you're going to preview order, the trade will be completed at the next available price, you just place your order, and you have placed your order, and you have that money now invested, be sure to do that step, because, be sure to do this step right here, don't just transfer the money from your bank account to the Fidelity account, because your money is not getting invested, unless you actually invest it. Lastly, we want to set up contributions, so we want to set up how often we're going to contribute money to this account, so I'm going to show you how to do that on the computer as well, so we're going to go to transfer, okay, and then we're going to choose manage reoccurring accounts, it's small down there, I don't know why it's small, it should be bigger, because this is very important, you see my, and right here you can see my reoccurring accounts, and right here you can see my reoccurring transfers, these two right here are my brokerage accounts, I invest in Tesla and Nvidia, and right here is my, right here is my Roth, so VOO, which is an ETF, and then I invest into FX, into FX AIX, which is what we just put that $3 into, so these are reoccurring transfers which come out on the 28th of every month, and that's going to be $400 going into there, going in there on the 28th of every month, and into VOO is going to be, is going to be $183 coming out on the 27th of every month, and this 183 and 400 is 583, and 583 times 12 is $7000, so, and 583 times 12 is about $7000, not all the way there, but that would be me maxing out my account, and actually it's going to be over because I'm already at $1500, so I just want to max this account out, I want to see how long I can do it, hopefully I can do it until I turn 59, and it'll be good if I'm able to max this account out. So for you to set up reoccurring transfers, you just create an activity, investments, you choose what you want to invest in, so let's go back to mutual funds, we're going to go Roth IRA, we're going to do FXAIX, which is, it's the catch-all, you know, it grows at a great rate, it's a good fund to put your money in, you can't go wrong with FXAIX on Fidelity, on index funds, okay? And then you put how much you want to put in there a month, say I do 200, and you're going to select your frequency every two weeks, and you choose the day, every two weeks on a Wednesday we're going to invest this, or let's do once a month, let's do monthly, select your date, on the 19th this money will be invested, start date, and you're going to use linked bank account, because you already have your bank account attached, right? So this money is going to be transferred from your bank account, 200, 200, that's what's going to be invested monthly, FXAIX, FXAIX monthly on the 19th, come straight from the account and you preview, and then you just buy, you preview it, confirm, I'm not going to confirm because I already have monthly contributions already set up, and that's how you do monthly contributions, but I also want to go show you guys FXAIX, the Fidelity fund, the index fund that I use, I want to show you the index fund I use and its growth over time, it's pretty good. So if you see right here, the annual returns last year, one year ago was 22%, which is crazy, the last three years, 8%, last five years, 13%, and the last 10 years, 12%, so it's been growing at a really good rate, and here's my year to date returns are seven, the average is about seven or eight, that's what people use, but here it is, 10 years, 12, so it's pretty good. So in conclusion, opening a Roth IRA is a good thing, you should definitely do it, and I hope that this video helped you figure out how to do it, and I want to show you guys what could happen to your money if you actually let it grow, if you actually contribute the maximum that you can to a Roth IRA and it grows at a certain percentage, like 10%, 12%, or 7%. So we're going to go to a Roth calculator, I spelled calculator wrong, we're going to use bank rates calculator, they have a pretty good one, simple, so we're going to say you have zero dollars in your Roth IRA, you are 25 years old, how much would you contribute annually? $7,000. Oh, maybe I'm wrong, maybe 6,500, whatever, we're going to say 6,500, so let's say you contribute 6,500 annually, what age do you want to retire? You want to retire at 59, and at a 7 rate return, and as you see, if you have zero dollars in there, and you max out your account, you have $833,000 in your account, that's at a 7% return, now what we saw the last 10 years, it was at about a 12% return, so we're talking about $2 million when you retire, you can even mess around with it at 10, 15, 95, 1.5, it's good, and a monthly of 583, people are paying car payments on those, people are paying lease payments on, people are paying that much for lease payments, people are paying $583, $600, $700 for car payments, so if you maybe forego having a car payment, or you seem to have a car payment, but you make enough money where you can still invest the max into your Roth, I recommend you do so, and if you want to retire early, say you want to retire at 50, you have a pension set up or something, you still have $639,000, so this is a good account to invest in, it is an extra account, you first want to invest into the max of your 401k for your employer, that's first, but if you are able to invest into a Roth, you should, it has great benefits, and imagine you have $2 million in there, when you turn 59.5, you can pull that money out tax free, so you can pull out $2 million, it's crazy, it really is, and I hope you guys enjoyed this video, I hope these five steps helped you, and helped you understand more about how to open a Roth, and what a Roth IRA is, so I will see you guys in the next video, I have really been enjoying these videos, I appreciate you guys watching them, not getting crazy views, but it's fine, I enjoy making these videos for you guys, and I hope that you find it informative, and if you did, please like and subscribe to my channel, so I will see you guys in the next one. Bye.